Uber Eats- Way to it's denoument

In what would be one of the most significant consolidations in this sector, Uber Eats (the cab-hailing app) that started it's business in India in 2017 in the hope of capturing India particularly tier 2 cities is all set to sell its Indian business to Swiggy. It would be Swiggy's largest acquisition in the market and also Uber's first disinvestment. Both Swiggy and Zomato were in the race to acquire Uber eats, the former being ahead.



The transaction is likely to be a share swap, sources said, giving Uber around 10% stake in the Bengaluru-based company last valued at $3.3 billion. The background of it being their inability of Uber Eats to make a mark in India because of well-established Zomato and Swiggy. It ranks third after the Giants and just above Ola’s foodpanda.



One needs to take into consideration that Zomato and Swiggy in the past few years have been constantly raising funds so as to tear the market and acquire new customers whereas both Uber Eats and Foodpanda have been busy in providing discounts and burning cash. Uber East in India burned around $25 million on an average 9 million orders a month whereas Swiggy burning $40 million on an average of 27 million orders a month. Swiggy and Zomato both are loss-making companies by providing discounts to customers and incentives to delivery personnel but the round of capital investment helps them to recover for a period.

Uber Eats had said last year that they were thinking of wide expansion by adding 4500 delivery personnel and 100 restaurants a day but all these looks like a mirage for them.

Figures released by Uber last week showed revenue grew just 2% in the fourth quarter, a sign that the ride-hailing giant continues to heavily subsidise rides in competitive markets. The company reported full-year revenue for 2018 at $11.3 billion while losses before taxes, depreciation and other expenses stood at $1.8 billion, according to Reuters. While losses have come down significantly from $2.2 billion in 2017, Uber needs to clean up its books further in the run-up to the public offering, which is expected to be one of the biggest public stock listings to date. The sale would help them to recover some losses that it had suffered.

Uber Eats faced the wrath of its own of not being able to cope up with the Indian market, it’s not just the losses that are the cause of its exit but I feel that the services provided by Uber Eats is miserable and the day has come for them to exit India.

It would be quiet interesting to see that how Zomato reacts to this and how Swiggy performs after the acquisition is finally done.

For further details-Moneycontrol