With a highly challenging environment for technology companies, quick-commerce company OrdersYa knows that exorbitant growth rates, driven largely by the pandemic, have slowed, but the potential remains intact. The great challenge is to prioritize the investment to continue the development of the business.
In the midst of the pandemic crisis, many opportunities arose for various companies, especially those in the technology sector. In Latin America, quick -commerce apps experienced a period of great apogee, with growth rates not thought of years ago.
OrdersNow, the Latin American unicorn is one of them. With a presence in 15 countries in the region (Argentina, Uruguay, Bolivia, Paraguay, Chile, Peru, Honduras, Guatemala, Dominican Republic, Panama, Ecuador, Nicaragua, Costa Rica, El Salvador and Venezuela), it has known how to take advantage of the pandemic momentum and today , in an environment of inflation, presence and deceleration in growth rates, is committed to
AméricaEconomía spoke with Esteban Gutiérrez, CEO of PedidosYa about how they are facing this new scenario plagued by inflation, high interest rates, a possible global economic recession and a business model that for many companies still cannot be profitable and depends largely on the capital they raise in financing rounds. Not only this, the hostile environment has meant that many technology companies have had to make massive layoffs to stay afloat.
“Yes, it is true that the combination of no longer being in a pandemic and, at the same time, what happened to the technology industry - with the delivery industry in particular - means that today we are investing much less money than before. That also explains why we are growing at lower rates than we did before,” explains Esteban Gutiérrez.
According to the company, growth continues. Thus, in the 2023 quarter, sales rose 21% compared to the same period in 2022, while income rose at a rate of 18%, achieving historical records in orders, active customers and monthly purchase frequency. And although it does not give figures, it assures that it achieved positive profitability in the 15 countries in the region where it operates.
“When you compare the billing of the first quarter of this year with that of last year, it is a large growth. For more traditional industries these are very, very large numbers. “We continue on a path of growth,” notes Gutiérrez.
Financing, for now, is not a contingency for this unicorn of Uruguayan origin. And PedidosYa is part of Delivery Hero - the German multinational online food ordering and delivery company that has Glovo in its portfolio of companies and is listed on the Frankfurt Stock Exchange - after being acquired in 2014.
“The first source of financing we have is the same portfolio of places where we operate, which basically allows us to pre-allocate (pre-allocate) profits from one side to invest in another. Being part of a public company we always have the possibility of being able to finance ourselves with the market. At the beginning of this year, Delivery Hero issued convertible bonds that basically allowed it to improve its cash profile and in turn, during the presentation of first quarter results, Delivery Hero announced that starting in the second half of the year the business will generate enough cash to be self-sustaining. We have expectations that from the guidance we are giving as a company and if the execution of everything happens correctly, we should not have a financing problem,” says the top representative of PedidosYa.
And although Gutiérrez does not provide billing figures, in April the parent company, Delivery Hero, presented the financial results for the first quarter of 2023. Thus, in this period the group's income (not detailed by company) amounted to 2,494, 3 million euros (about US$ 2,698 million), an improvement of 12%. The group also did not publish specific profit or loss figures, but explained that between January and March its adjusted Ebitda recorded an improvement of about 250 million euros (US$270.5 million).
Focused investment
Although Gutiérrez affirms that financing is not a concern for now, the way of investing is now more focused, prioritizing resources to serve a larger base of users.
“Before the pandemic, a very large percentage of our orders were free of shipping costs. Today, most orders, unless they are subscribed to our Plus program, have a shipping cost. We invest a lot of money in generating incentives for people to buy. Today these levels of incentives have decreased for several reasons, not so much in absolute terms of the level of investment, but in relative terms. That has happened mainly because our user base is much larger. For example, if you spend 100 and have 100 users, you can incentivize one per user. If today we continue spending 100, but instead of having 100 users we have 1,000, it turns out that it is much less than what one can invest per user. Another thing that is not minor is that due to inflation things are much more expensive and the money that was allocated to invest in generating consumption today yields much less," he details.
Therefore, prioritizing investment is key to making it efficient. Currently, PedidosYa invests mainly in the pillars of its business and in breaking down barriers or blocks that do not allow it to continue growing. On the one hand, the investment is focused on the acquisition of partners , since the main added value they offer to the user is finding multiple options to buy. “We have to be adding new content all the time and it is an investment that costs a lot of money,” acknowledges the Argentine executive.
The other component where they concentrate the investment is to guarantee users a good shopping experience, that is, that they not only find the place, but also that the order arrives on time. “As our business continues to grow, our need to have more people wanting to deliver with PedidosYa also increases to be able to deliver those incremental orders and there is another source of investment.
Reducing the cost of shipping is another factor on which PedidosYa concentrates efforts and resources. “In Latin America, one of the main barriers for those who have to make their first purchase in the delivery world or for those who have already made one and can make more, is the price of things and the cost of shipping. We try to put money into making those things worth less, at least for a period of time until the user gets used to the service. The other fourth pillar in which we invest money and we have invested a lot in the last 13 years is human capital and mainly in technology, because at the end of the day to make everything happen in the best way. Technology makes delivery faster, cheaper or with a better experience,” says Gutiérrez.
Telephone delivery , the Plus program and PedidosYa Market
Global and regional delivery players have settled in the region. Although for Esteban Gutiérrez most of them have many interesting things, the competition also lies in another field. "Our main competitor is still people who order delivery by calling the restaurant directly. It is gigantic and what we look at is how we can beat the phone, or what attributes it has that we lack to achieve that," he says.
For recurring users, the quick -commerce app launched the PedidosYa Plus subscription program in 2022. Although the CEO of the company does not specify the percentage of users who already pay for the service (which has an approximate cost of US$ 4.5 per month), he assured that they are well ahead in meeting the projected goals.
“The program is a very good solution so that people who do not buy on our platform very frequently become much more frequent users. Its main value proposition is that it allows free shipping and that encourages many people to explore and order different things. Another advantage is our own supermarkets (PedidosYa Market). We generally give discounts on purchases and if you are part of our Plus program you have discounts every time you shop at our own supermarket. We have seen that almost all the people who subscribe to the program greatly increase their use in our supermarket because they see the discount we give on purchases as a true benefit,” he says.
Regarding the markets in which they operate, Esteban Gutiérrez points out that all 15 have had a good performance, although the stages of maturity are different in each of them. “We have mature countries that we have been in for much longer, such as Argentina, Chile or Uruguay. These markets have met both last year and so far in the first quarter the objectives we have set. Then we have newer countries where we have been operating for less time and clearly they grow much faster than the previous ones, but they are much more immature and where we have been operating for much less time. Of that group, I highlight Peru, Ecuador and El Salvador, which are the markets where we have been growing the most in the last 18 months,” he says.
In the short term, the CEO of PedidosYa does not plan to enter a new market - it is not present in Mexico, Colombia or Brazil - but he always analyzes opportunities with the appropriate conditions.
Despite a global context, Gutiérrez is optimistic and highlights the growth obtained in lean times. “The industry has slowed down a bit, but in almost all markets we have managed to grow above the industry average. This has allowed us, in 14 of the 15 markets where we are, to gain market share in the last 12 months, even in this context in which it is increasingly difficult to generate that incremental order,” he concludes.
