Christmas sales surge at Deliveroo as Amazon tie up boosts growth

·3 min read
Deliveroo founder Will Shu (Andrew Parsons / Parsons Media)
Deliveroo founder Will Shu (Andrew Parsons / Parsons Media)

Deliveroo enjoyed a strong end to 2021 as momentum from its tie-up with Amazon continued.

The takeaway app said today that the total value of orders on its platform rose by 33% to £1.7 billion in the final quarter of 2021. The performance was driven by particularly strong growth in the UK. Strength in the final few months of 2021 helped full-year gross transaction value rise by 70% to hit £6.6 billion.

CEO and founder Will Shu told the Standard the fourth quarter “capped a really strong year”, adding: “We performed really well comping a pandemic period.”

Unliked last year, Britain was not in lockdown in the run up to Christmas but people was told to work from home to curb the spread of Omicron. Shu said the “Plan B” measures didn’t have much of an impact on the company’s performance.

“We always see more people ordering as it gets colder,” he said. “I wouldn’t say that we say that we saw a significant difference this year in terms of other years.”

A bigger driver of growth was the company’s partnership with Amazon, one of its biggest investors. In September, Deliveroo struck a deal to offer its Silver Plus subscription service free to Amazon Prime customers. Shu said Silver Plus users had tripled since then.

Deliveroo is also benefiting from the growth of grocery shopping on its app. Supermarket shops have risen from 6% of orders by value this time last year to 8%.

The company faces competition from a raft of new players in the market, with the likes of Zapp, Gorillas and Getir all promising grocery delivery in as little as 10 minutes. Deliveroo has launched its own super-fast competitor, Hop, in partnership with Morrisons.

Shu said: “We’re talking to a lot different grocers or partnering with them, so there’s a lot of interest from people.

“There are some really interesting consumer dynamics here: the retention is very high, the frequency is very high. Now we’re really focused on: how do you get the operations to a point where it’s very cost effective? We’ve dedicated a lot of technology resources to it.”

Deliveroo said it was on track to meet previous profit margin guidance of between 7.5% and 7.75%. Shares, which have more than halved since listing last year, rose 5p, or 2.6%, to 175p. Shares were sold at 390p in last March’s IPO, with around 70,000 small-time investors buying into the float.

Shu said today: “I’m obviously disappointed. Ultimately I focus on the business outputs of the company, that’s what I can control. We’ve obviously seen a big, broad-based technology market decline in the US that’s bled over into the UK but the message I would focus on is: look, we’ve achieved strong growth, despite lapping Covid from last year; we’ve raised GTV [gross transaction value] guidance twice this year and we’ve met the top of that range; and the business continues to just perform very strongly. That’s really what I’m focused on.”

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