Deliveroo's Prospective IPO

Deliveroo's Prospective IPO

Author
Discussion

Greshamst

1,452 posts

86 months

Wednesday 31st March
quotequote all
If I don’t understand Deliveroo’s proposition given that they still don’t make a decent profit on 30% markup, I understand ubereats even less...

Prices are always cheaper on ubereats than deliveroo. Both for like for like menu items, but also for delivery cost.

And it’s very rare that I order on ubereats without a 25%/30%/50% off code, there’s always something in my inbox.

Deliveroo send me £2.50 once every month or two.

Ubereats must be eating massive losses to try and outsaturate deliveroo. I’d be very concerned with that if I l was an uber shareholder.


okgo

30,952 posts

164 months

Wednesday 31st March
quotequote all
Uber has never made any money either. Neither has Slack, Lime, Peloton, Airbnb etc.

Nothing is what it seems. So it seems.

The problem potentially with all these idiot delivery companies is that they think they have a brand. They don’t. It’s whoever is cheapest to bring the slop to my door.

BobToc

530 posts

83 months

Thursday 1st April
quotequote all
Uber’s mobility business is profitable.

mikeiow

3,091 posts

96 months

Thursday 1st April
quotequote all
okgo said:
Uber has never made any money either. Neither has Slack, Lime, Peloton, Airbnb etc.

Nothing is what it seems. So it seems.

The problem potentially with all these idiot delivery companies is that they think they have a brand. They don’t. It’s whoever is cheapest to bring the slop to my door.
yes
Discussing this with my shrewd 20-something offspring last night....that last point was precisely what they said

We live in a strange world.....

supersport

3,307 posts

193 months

Thursday 1st April
quotequote all
I had a chat with a friends son who does delivery for these various companies and I can’t see how they can ever make money.

He is selective around when he does deliveries but can make proper money from it.

I decided jumping in was pointless and likely to lose money, akin to the Lastminute.com one I recklessly joined in many years ago. At least I got a t-shirt out of that.

At the volumes being offered to punters it was never going to make loads anyway.

Seems to have been the right choice, and I wouldn’t be putting any in afterward either.

Mr Whippy

23,948 posts

207 months

Thursday 1st April
quotequote all
I was reading an article about how LSE is changing regs to allow non voting right shares and SPAC etc to get a UK tech boom.

They referenced Deliveroo as tech.

It’s a delivery company, that uses tech to fill bookings.

Royal Mail isn’t a tech company but they’ll use tech to sort it all out.


If it’s on an app. It’s tech, and if it’s tech it sells to anyone for anything rolleyes


I think “tech“ is over now. Just like owning a domain name was over in 2001.

People will use an ounce of sense now, rather than buy hype.


Maybe put AI in the name though.

DeliverooAI, SPAC that!

Edited by Mr Whippy on Thursday 1st April 08:38

DonkeyApple

41,109 posts

135 months

Thursday 1st April
quotequote all
I think the wider issue is that this was bizarrely seen as a tech IPO and it's failure now reflects on the LSE which is struggling to evolve and get tech business primarily because of the stinky British cultural tendency of looking at a steaming turd and saying that it's a steaming turd rather than adopting the more US approach of becoming priapismic, forming a religion around said turd and getting the whole of humanity really excited about getting a bit of turd for themselves.

The problem the LSE has with attracting tech is very neatly summed up, if anyone can recall, by how London reacted to David Blaine.

'Blaine underestimated the cynicism of the British public, though. During his box residency, Blaine was pelted with eggs and paint-filled balloons. Golf balls were struck in his direction from Tower Bridge. Drummers kept him awake at night. Tabloids, ever sceptical of anything characterised by the words “postmodern” or “performance art”, seized upon the stunt, staging appetite-whetting barbecues beneath Blaine and even flying a hamburger up to his box with a remote-controlled helicopter in order to taunt him.

“We think the stunt’s really poor – it’s just rubbish. Forty-four days of this is just boring,” 33-year-old north London web designer Jason Robinson told the BBC at the time. Robinson was so angry about the stunt that he helped set up a (sadly no longer accessible) website named Wake David that was dedicated solely to crowdsourcing ideas for how to do just that.

The UK’s “Blaine-baiting” became international news. Hollywood trade mag Variety reported in a news story entitled “Illusionist gets a rude UK reception” that Blaine wasn’t receiving the “oohs and ahhs” he was used to on home soil. In fact, it claimed, members of the gay community were instead being incited to “pelt Blaine with chipolata sausages”.'

It's clearly not a tech company. Most retail businesses have an app that doesn't make them suddenly a tech business. It's a service sector business that is built around the prospect of circumnavigating minimum wages and removing upfront costs from restaurants etc. But in many ways we need to suspend our British mentality of seeing a bk and calling it a bk and instead become a little more American and despite seeing a bk, knowing it's a bk the only words uttered are that it's a golden nugget.

AyBee

9,472 posts

168 months

Thursday 1st April
quotequote all
mikeiow said:
okgo said:
Uber has never made any money either. Neither has Slack, Lime, Peloton, Airbnb etc.

Nothing is what it seems. So it seems.

The problem potentially with all these idiot delivery companies is that they think they have a brand. They don’t. It’s whoever is cheapest to bring the slop to my door.
yes
Discussing this with my shrewd 20-something offspring last night....that last point was precisely what they said

We live in a strange world.....
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.

NickCQ

4,493 posts

62 months

Thursday 1st April
quotequote all
mikeiow said:
okgo said:
The problem potentially with all these idiot delivery companies is that they think they have a brand. They don’t. It’s whoever is cheapest to bring the slop to my door.
Discussing this with my shrewd 20-something offspring last night....that last point was precisely what they said
I think it's not so much a story of brand as economies of scale.

Amazon is a case in point. It's a no-brainer to subscribe to Prime because of product choice, delivery speed and all-in cost. The reason they can offer such a good service (from the customer perspective) profitably where no-one else can is a function of sheer scale.

The bull thesis for Delivero, Uber etc is that as the network size goes up, you can use your capacity in such a flexible and efficient way that you have a defensible cost advantage. Once you build scale you turn down marketing cost and suddenly you are hugely profitable despite offering the cheapest service for the restaurant and the customer.

I'm not sure it will work in food delivery though - as I understand it the riders don't get paid for 'hanging around' time so utilisation is not a big gain. Perhaps there's a marginal benefit from getting riders to drop multiple orders but that's naturally limited by customers' desire for hot & prompt food. Plus some monopsony power to squeeze the restaurants further. As I mentioned upthread, going vertical by preparing the food yourself has its own issues & changes the investment proposition for the worse.

DonkeyApple

41,109 posts

135 months

Thursday 1st April
quotequote all
I do suspect that the key to profitability will stem from some almost random event that opens up using the network for something other than food.

I don't think random, small supermarket purchases are the key like the emergency pint of milk but that it's going to take a change no one really saw coming.

Failing that the only solution appears to be consolidation so that competition is removed but even that would pave the way for local competition and a subsequent franchise model.

joshleb

1,315 posts

110 months

Thursday 1st April
quotequote all
AyBee said:
mikeiow said:
okgo said:
Uber has never made any money either. Neither has Slack, Lime, Peloton, Airbnb etc.

Nothing is what it seems. So it seems.

The problem potentially with all these idiot delivery companies is that they think they have a brand. They don’t. It’s whoever is cheapest to bring the slop to my door.
yes
Discussing this with my shrewd 20-something offspring last night....that last point was precisely what they said

We live in a strange world.....
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.
As for the most part the restaurants we want to order from are on the different apps, me and the missus will put our order in and whatever codes we have and see which comes out cheapest from Uber/Deliveroo/Just Eat and order with them.

I've got no brand loyalty to any of them and as soon as restaurants are open again properly it will probably just end up being a once a month type thing rather than the weekly it currently is.

NickCQ

4,493 posts

62 months

Thursday 1st April
quotequote all
AyBee said:
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.
The strange thing is that the market thinks the company is worth north of £5 bn despite those relatively obvious shortcomings in the business model.

mikeiow

3,091 posts

96 months

Thursday 1st April
quotequote all
NickCQ said:
AyBee said:
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.
The strange thing is that the market thinks the company is worth north of £5 bn despite those relatively obvious shortcomings in the business model.
Indeed....the strange bit being the fact they think they have a brand that people care about

DA: spot on as usual, we do have a tendency to call out the emperors new clothes a bit.
Reminds me of my first US kick-off with what turned into a multi-$Bn tech firm over the next decade: at one point the execs were bouncing about, excitedly saying how well we were doing, 'double or die' & how the targets would be doubling the next year. The room erupted....but you could spot the small line of Brits, all looking at each other saying "eh? so we have to work TWICE as hard? what are they cheering for?" hehe
A hint of irony: we knew the growth lie ahead, but nonetheless, there is a significant difference!

vulture1

8,677 posts

145 months

Thursday 1st April
quotequote all
NickCQ said:
AyBee said:
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.
The strange thing is that the market thinks the company is worth north of £5 bn despite those relatively obvious shortcomings in the business model.
It's a dog with fleas

supersport

3,307 posts

193 months

Thursday 1st April
quotequote all
mikeiow said:
NickCQ said:
AyBee said:
Why is that strange? If there's no difference between the service they provide then the only difference is whoever is cheapest or whoever provided me with the most recent discount code. A lot of the delivery drivers/riders will work for both anyway.
The strange thing is that the market thinks the company is worth north of £5 bn despite those relatively obvious shortcomings in the business model.
Indeed....the strange bit being the fact they think they have a brand that people care about

DA: spot on as usual, we do have a tendency to call out the emperors new clothes a bit.
Reminds me of my first US kick-off with what turned into a multi-$Bn tech firm over the next decade: at one point the execs were bouncing about, excitedly saying how well we were doing, 'double or die' & how the targets would be doubling the next year. The room erupted....but you could spot the small line of Brits, all looking at each other saying "eh? so we have to work TWICE as hard? what are they cheering for?" hehe
A hint of irony: we knew the growth lie ahead, but nonetheless, there is a significant difference!
Americans do think differently don't they.

They include a translation matrix in a lot of our weekly "What's going on emails" because they tend to get over excited. They don't really understand why call a turd a turd hehe

NickCQ

4,493 posts

62 months

Thursday 1st April
quotequote all
vulture1 said:
It's a dog with fleas
"They're analysts, they don't know the difference between preferred stock and livestock"

andyb

129 posts

250 months

Thursday 1st April
quotequote all
DonkeyApple said:
I do suspect that the key to profitability will stem from some almost random event that opens up using the network for something other than food.

I don't think random, small supermarket purchases are the key like the emergency pint of milk but that it's going to take a change no one really saw coming.

Failing that the only solution appears to be consolidation so that competition is removed but even that would pave the way for local competition and a subsequent franchise model.
I'm struggling to imagine what scenario could possibly make them successful, that someone else couldn't easily compete with. How about cannabis gets legalised and then they get an exclusive on the delivery? smile

It definitely reminded me of Aston Martin IPO in that in the run-up it was hard to see who would invest, but somehow got away.

Mr Whippy

23,948 posts

207 months

Thursday 1st April
quotequote all
NickCQ said:
I think it's not so much a story of brand as economies of scale.

Amazon is a case in point. It's a no-brainer to subscribe to Prime because of product choice, delivery speed and all-in cost. The reason they can offer such a good service (from the customer perspective) profitably where no-one else can is a function of sheer scale.

The bull thesis for Delivero, Uber etc is that as the network size goes up, you can use your capacity in such a flexible and efficient way that you have a defensible cost advantage. Once you build scale you turn down marketing cost and suddenly you are hugely profitable despite offering the cheapest service for the restaurant and the customer.

I'm not sure it will work in food delivery though - as I understand it the riders don't get paid for 'hanging around' time so utilisation is not a big gain. Perhaps there's a marginal benefit from getting riders to drop multiple orders but that's naturally limited by customers' desire for hot & prompt food. Plus some monopsony power to squeeze the restaurants further. As I mentioned upthread, going vertical by preparing the food yourself has its own issues & changes the investment proposition for the worse.
Even Amazon subsidises retail and probably Prime specifically, with AWS.

Being in on Deliveroo was probably Amazon hoping to get in on the gig and trying to lever more from their network of cheap delivery network to try get it approaching profitability hehe


Sniff test is an obvious solution.

Once faith is lost in other people ignoring their sense of smell, everyone is going to be getting in on using their noses.

Alongside SPACs and reddit pump and dump and derivative leveraged private hedge funds, the last think the markets need is people using their common sense hehe

Condi

12,098 posts

137 months

Thursday 1st April
quotequote all
The problem at the moment is there is too much money looking for a home. List any old st and people will buy it.

The Spruce Goose

28,554 posts

161 months

Thursday 1st April
quotequote all
in the US, I was looking at a resturant in New York and there are 5 delivery companies. Doordash, Grubhub, Postmates, Uber eats and caviar....

So is the market saturation and inflated or is it being picked apart by niche businesses.