Ladd on Deliveroo’s new rapid grocery delivery service: ‘much ado about nothing’

Deliveroo plc (RON: LOO) has partnered with Morrisons to launch a new service it’s calling “Hop” that marks its debut in rapid grocery delivery.

The first warehouse or “dark store” for the new service that puts Deliveroo in direct competition with several start-ups in Europe will be opened in southwest London.

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Shares of Deliveroo are down about 1.0% on Thursday.

Why Brittain Ladd isn’t convinced of the move

Global supply chain expert Brittain Ladd, however, dubbed the move “much ado about nothing” as he gave it a 4 on a scale of 1 to 10.

On LinkedIn, he said Deliveroo was late in penetrating the rapid grocery delivery space but outlined four recommendations for the British company to make its strategy work.

Ladd suggests Deliveroo keeps a “laser-like focus” on hypergrowth. He wrote:

Deliveroo should partner with Morrisons to fund opening between 50 to 150 dark stores with a focus on the largest cities across England over the next 3 to 4 months.

Deliveroo operates in many more markets than Morrisons. According to Ladd, Deliveroo should partner with other wholesalers in Morrisons-less locations to “duplicate the hypergrowth strategy”.  

Ladd recommends Deliveroo raises more capital

On top of that, he also sees an opportunity for Deliveroo in restaurants it served that have been pushed into shutting down due to the global pandemic.

Convert the closed restaurants to dark stores, and franchise them; this will accelerate growth plus turn the dark stores into revenue and profit-generating business units.

Lastly, Ladd says it would be wise for Deliveroo to explore means of raising more capital to fund both accelerated growth and strategic acquisitions to expand its footprint in rapid grocery delivery.

He sees Weezy, Cajoo, Zapp, and Jiffy Grocery as suitable targets for Deliveroo to acquire.