Glovo, the Spanish home delivery startup has announced in a statement that it would be shutting down its operations in Egypt and Turkey, as well as Uruguay and Puerto Rico in an effort to push profitability forward. The announcement was made by Oscar Pierre, co-founder & CEO of Glovo.
The company stated in an email sent to customers in Arabic, that the decision to shut down was not easy and came out of the need to serve their customers and couriers in the best way possible. Adding that, “When Glovo is not able to excel in a specific market, they retreat and redirect their resources to other locations, in order for the company to reach its desired heights.”
Second Time Around
This is the second time that Glovo announces shutting down its operations in Egypt. The first time was on April 30th, 2019, when the news surfaced as a result of Glovo’s message to its couriers.
However, Glovo was ordered shortly thereafter to keep its operation running by the Egyptian Competition Authority (ECA), who accused Glovo and its German investor, Delivery Hero of violating Egyptian competition law.
The ECA added, that both companies had agreed for Glovo to exit the Egyptian market, in order to eliminate competition to Delivery Hero’s other brands. This is because, Delivery Hero, which owns Glovo’s direct competitor in the Egyptian market, Otlob, acquired a 16% stake in Glovo in 2018.
The Profitability Craze
Glovo’s CEO had revealed to TechCrunch that the Middle Eastern delivery market is essentially too competitive for Glovo to grow in. After shutting down in 4 markets, Glovo is now operational in 22 markets with a focus on growth in South East Asia, South West Europe, and Eastern Europe and Africa.
Glovo’s news comes just as Uber announced selling its India operation to its competitor Zomato for a 9.99% stake in the company. This led to a 6% surge in Uber’s shares.
It is evident that Uber’s disappointing IPO and WeWork’s failed IPO last year have led companies and investors to shift their priorities back to profitability as opposed to endless growth.
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