Zomato is an online food delivery app that delivers different foods from different restaurants and hotels. Uber Eats is a similar one that is the Indian food delivery division of Uber. Uber Eats, a San Francisco based food delivery giant decided to sell its business in India to Gurugram-based food tech startup Zomato. Though many rumours were spreading even before the deal yet it is completed now. Uber Eats has been bought for Rs.2485 crore. Thus, it makes Zomato the best in the Indian market and one step ahead of Swiggy. Swiggy is currently the market leader and Zomato being the next. However, this deal changed the market in no time. Uber Eats acquisition will surely make it the leaders of the market and provide more firepower. This deal will help Zomato capture at least 50-55 % market share in the food business.
What’s the stake?
The deal gives the Uber Eats a 10% stake in Zomato. According to reports, Zomato will not absorb Uber Eats employees, which means they will be either be absorbed in Uber’s other businesses or could face lay-off.
However, this deal will give Zomato clear-cut supremacy in the Southern States. Currently, Swiggy has a stronghold in the South-Indian states. The investors and business developers of Zomato, however, believe that this deal will change these numbers. When it comes to Indian food delivery market, Uber Eats is third in contention to its rivals Zomato and Swiggy. Uber Eats cannot compete with these two giants, as stats portraits it. Zomato and Swiggy are the undisputed leaders in this business that clock around 2-2.5 million orders daily in comparison to Uber’s 2.5-3.0 lakhs. Also, the value per order for Uber Eats is something around $2 per order as compared to $3-5 for Zomato.
What’s interesting about this buy?
Zomato and Uber Eats officials have confirmed that the deal is signed and Uber Eats customers are going to be directed away from Uber Eats to Zomato. Zomato aims to transition 90% of Uber Eats users onto its official platform. This deal had been in talks for almost a year and is at last finished now. Zomato buying their second contender helped it to have an upper hand versus their arch-rivals Swiggy.
This deal also helps them to consolidate their position in the market and online food industry. One of the officials said that they have one less competitor to deal with. This deal will help them to improve their position in Tamil Nadu, Kerala, and Madhya Pradesh. These are the regions dominated by Uber Eats. In these states, Uber Eats had a stronger foothold ahead of Zomato and Swiggy with an amazing 30% total market share. This makes Zomato stronger by conquering micro-markets all around India.
How is funding done?
The fund needed to buy out Uber Eats comes from the Zomato’s latest fundraising led by existing investor Ant Financial, an Ali Baba affiliate marketing brand. They helped to raise the fund collection of $150 million at a $3 billion valuation. It is believed that Uber too participated in this event yet could not compete with Zomato. There are no official releases from Uber Eats till now. People from both sides say that the talks are on hold and are to be maintained within the organization.
Uber’s Failure
Uber did fail to perform in the Indian market from its launch date and had been continuously overpowered by Zomato and Swiggy. After going public last year, they are frequently shut down loss-making units and branches with no mercy. In India, with a cash burn of at least $20 million per month, they constantly faced many financial problems. Uber officially declared that this business was imputing severe losses for the organization and was a low-priority one for them. During the quarterly results last year, it was officially declared that Uber Eats was a loss for them in India.
It’s Game-changing
It was because Uber entered this business in 2017 when Zomato and Swiggy roped in most of the restaurants and hotels. This made Uber to give more discounts to attract more users. Though it turned out to be successful yet they were not able to deal with the losses they inferred. Thus, it was reported that Uber had an operating loss of Rs.2197 crore in its food delivery business. Though it was expected to be sold to Swiggy last year yet Zomato grabbed their opportunity.
This would make Zomato even more powerful and economically productive in the Indian market. Thus, pure competition is going to take place between these two food delivery giants. Swiggy is currently the leaders of this industry and may step down due to this deal. Lots of exciting offers and coupon codes are waiting to for foodies to explore rich and diverse foods from different restaurants.
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