Food delivery service Rocket wants to become a global company rivaling Estonian Bolt Food, Spanish Glovo and American Uber Eats. And it has started its global expansion with the Netherlands.
In April this year, the company’s orange backpacks were spotted on the streets of Amsterdam, where it now works with nearly 50 restaurants and continues to connect new partners. For now, Rocket is the only service in the city that delivers food for free.
The Dutch market is competitive: Ukrainians have to work side-by-side with giants like Deliveroo, Uber and Thuisbezorgd. But despite the high competition, the Netherlands gives many opportunities to grow a business, Rocket said.
According to global auditor PwC, it is easy for a tech company to work there because the country has affordable taxes, simple laws and many economic incentives to support innovations.
For ambitious but still unprofitable Rocket, it is a great place to continue its expansion into Europe, the company’s press service said.
Dutch market
Like everywhere in the world, food delivery is in demand in the Netherlands as many people stay home and order food online during the lockdown. This trend will continue and will likely become permanent, according to the survey by analyst Deloitte.
There are two most common ways to order food in the Netherlands: either to use one of the delivery service apps or order directly from a restaurant.
Rocket said that many eateries are “dissatisfied” with how local delivery services work and Rocket wants to help them.
To ease the expansion in the Netherlands, Rocket opened an office in Amsterdam and hired new staff there. The core team of nearly 300 people remains in Ukraine.
Becoming international
Turning Rocket into an international business wasn’t easy, the company said.
It had to change its name from Raketa to Rocket when it started operating in Nicosia; it had to convert the prices from hryvnias to euros and adjust its app to payment systems used in different markets.
The legislation and data protection regulation in Europe is also different and takes time to adjust, Rocket said.
However, the company is eager to go abroad to avoid risks of working in just one country, Rocket’s cofounder Aleksey Yukhymchuk said in an interview with Ukrainian media Novoe Vremya.
Rocket’s competitors, including Bolt, Glovo and Uber, have already built an international chain and Rocket tries to keep up. The company plans to launch its service in 10 more countries over the year and aims at 15% of market share in each of them.
After the Netherlands, Rocket will probably enter Slovenia, Yukhymchuk said in his interview with YouTube channel Big Money.
Slovenia ranks 37th among 190 countries in the Doing Business ranking released by the World Bank, and for Rocket, the ease of doing business is important. The Netherlands is on the 42nd place. Ukraine ranks 64th.
Unprofitable business
According to Deloitte, Rocket is the second most popular delivery in Ukraine after Glovo, which has been operating in the country since 2018.
Apart from Glovo, the company also competes with Estonian Bolt Food that launched its service in October 2020 and has become popular in Ukraine due to its free delivery and discounts from restaurants.
Spanish and Estonian businesses are valued at billions of dollars and have customers all over the world, while Rocket’s valuation ranges from $50 million to $100 million, according to Forbes.
To expand, delivery services attract money from investors: Spanish Glovo, for example, raised $528 million this April, while U.K. Deliveroo attracted $2.1 billion and is now valued at $10.4 billion.
Ukrainian Rocket couldn’t find money at first because it launched its service at around the same time as Glovo and Uber Eats. Investors said that there was no place in Ukraine for another food delivery business.
Finally, Rocket raised money from private investor Igor Rochlin who now owns 86% of the company, according to database YouControl.
“It was a perfect match: We had the project, software, process, strategy to grow, team and product, while he had a desire to launch a (delivery) business himself,” cofounder Stanislav Dmitrik told Forbes.
To serve its customers faster, Rocket opens so-called ghost kitchens that prepare food exclusively for the delivery service. Such kitchens are cheaper than full-fledged restaurants and can prepare foods faster, while being closer to customers
Yukhymchuk said that Ukrainian company has another ace in the hole to fight wealthier competitors. “We are stronger because we are local and understand the mentality of Ukrainians,” he said.
In 2021, the company hopes its strategy will help it to break even in Ukraine and inhabit the markets abroad.
