The online delivery business isn't easy. The latest news is that Deliveroo has decided to end its service in Germany – Europe's largest economy. In an e-mail on Monday, Deliveroo told its customers it will cease operations on 16 August, citing that it can't continue with the current 'brilliant' standards in service that Deliveroo is known for. 'Growing operations around the world' is the new focus for the Amazon.com Inc. affiliate.
Deliveroo has had problems in Germany for a while, according to digitalcommerce360.com, suffering from expensive competition that has forced established players to consolidate services or quit trying.
The German Delivery Market
Last year, Takeaway.com NV agreed to buy the German businesses of Delivery Hero SE to end an expensive rivalry, with the aforementioned Takeaway.com NV and Britain's Just Eat Plc pursuing an all-share £5 billion ($6 billion) combo.
Deliveroo employs cyclists that deliver restaurant meals to their customers' doors in boxy backpacks with Deliveroo on the sides. The business model is, logistically, more challenging than just offering a platform to connect restaurant and hungry consumer. The Deliveroo service is available in cities like Berlin, Cologne and Frankfurt, although they already started retreating from some German cities like Leipzig and Stuttgart last year.
A Tough Market
Making money in Germany is more challenging than some other markets, as consumers order a lot less than in other places like the UK or the Middle East. Takeaway already put Foodora (a Deliveroo clone) out of business in Germany, with Uber Eats never even having had a start in Germany.
Try, Try Again
Deliveroo has said they may try the German market again in the future, but will first refocus its resources to grow its business in other parts of Europe and the Asia-Pacific region. Job losses for employees, riders and restaurants are going to be compensated.
Last May, Deliveroo went on record saying they had scored $575 million in funding from Amazon.com Inc., among other investors. At the same time, they said their expansion would continue in markets including Dubai, the UK, France, Italy and Spain.