By Douglas Busvine and Nadine Schimroszik
BERLIN (Reuters) – Delivery Hero, the food delivery company that spans over 50 countries, is relaunching operations in its home city of Berlin as a first step towards winning back the German market it quit over two years ago.
The 10-year-old e-commerce company, a constituent of Germany’s DAX blue-chip index, is going back to its roots after an Asian growth spurt culminated in its recent $6.9 billion takeover of South Korea’s Woowa.
Delivery Hero sold its German operations https://www.reuters.com/article/us-delivery-hero-divestiture-takeaway-co-idUSKCN1OK038 in Dec. 2018 to Dutch rival Takeaway.com – now Just Eat Takeaway – to focus on markets spanning Asia, Europe, the Middle East and the Americas.
In the view of CEO Niklas Oestberg, the German market has lagged Delivery Hero’s own development while it was away, opening up an opportunity to win it back.
“We felt that over the last two years that the service in Germany has not got any better – sometimes even a little bit worse,” Oestberg told Reuters on Wednesday. “We felt like our service has become very, very good.”
Delivery Hero will start in June with the ‘soft’ launch in Berlin of its foodpanda brand that is best known in Asia, promising delivery times of as little as 7 minutes to customers who order on its smartphone app.
It will follow in August with a broader rollout across German cities of restaurant food delivery and quick commerce served by its own network of local warehouses and shops.
“We might have a product good enough for challenging for number one [spot] in the very long term – that’s our logic,” the 40-year-old Swede said in an interview.
JOINING THE FRAY
Delivery Hero’s return to Germany coincides with a furious boom in rapid delivery, pitting it against startups like Gorillas that are growing fast and attracting lavish backing from venture capital investors.
It’s a market segment in which Delivery Hero is already active, running 600 of its own Dmarts – or delivery-only supermarkets – and processing more than 400,000 orders a day worldwide last month.
And, although margins in Delivery Hero’s quick commerce division are deeply negative, Oestberg said he could see a way to compete against supermarket chains that have to bear higher overheads and chart a path to profit.
He said he would not be drawn into a race, saying his goal was for Delivery Hero’s Berlin-based team to come up with the best product, rather than splurging on promotions to buy market share.
“I would be super-super happy if people come back and say: I love this service – this is so much better than anything I’ve ever had before,” Oestberg said, asked how the German operation would look in a year’s time.
“If the feedback I hear is very positive, then we can always scale, we can always put in more money behind it.”
($1 = 0.8220 euros)
(Reporting by Douglas Busvine; Editing by Alexandra Hudson)
