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Zomato Acquires Uber Eats Reason Behind The Deal or Failure of Uber Eats

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On January 21st, 2020, food delivery giant Zomato acquired Uber Eats. From this time Uber Eats discontinued its food delivery operations. Users traveling outside India can still enjoy the benefits of Uber Eats. Now all its delivery partners, consumers, and restaurants will be directed to Zomato. Zomato acquired food aggregator Uber Eats for ₹2,485 crores, and after this deal, Uber Eats holds ownership of 9.99% in Zomato. After the deal, 245 employees of Uber Eats are on a cliffhanger. Zomato hasn’t given any statement about the absorption of these employees.

Apart from the growth in the smaller cities and towns, the significant business of food delivery app scripts like Swiggy and Zomato is around 65% comes from the top cities. Now with the Uber Eats consumers, Zomato holds about 50-55 percent of the food delivery market industry. Now developers are focusing on developing Zomato clone scripts. 

The on-demand meal delivery service UberEats, connected with Zomato. The potential for many of these online delivery services is substantial, with around 44% of consumers using food delivery services at least once per month in the United States. Furthermore, the survey also found that 43% of consumers claimed to order their food online with an additional 13% ordering using a food delivery app. (source)

Uber Eats’s Journey in India

Cab hailing company Uber started its food delivery services in 2017. At that time two industry giants Zomato and Swiggy were already there. It was the first food delivery company that had a celebrity brand Ambassador – Alia Bhatt. Zomato started in 2008, and after five years, Swiggy began in 2013. By the time Uber launched its food delivery services in India, these two already had acquired more than half of the market. Zomato had around 40 million users, where Swiggy had 42 million users and the newbie Uber Eats had only 10 million user base at that time.

After starting the business in 2017, the average order value (AOV) of Uber Eats was rs 400, then in 2018 AOV was rs 300 with 3.5-4 million orders per month, and last year in 2019 it was rs 250. The AOV is showing its constantly dipping market. Besides having less user base, the users shared their grievance on twitter saying that the company Uber Eats was way better than Swiggy and Zomato. “The delivery experience, additional taxes, and application user interface of Uber Eats were much better than its competitors,” users said.   

Big Wins for Zomato

Zomato got quite a lot from this deal according to experts. Zomato got all its delivery partners, Customer information, business details, customer order history and much more. The delivery partners will benefit from this deal because everyone wants their food to be delivered home at the quickest. More people will order means, more delivery boys and more employment. Zomato serves more than 70 million users every month in 24 countries, with a partnership of 1.5 million restaurants. The addition of Uber’s business will definitely take this figure higher than Swiggy. 

Reasons: Why Uber Eats lagging behind Zomato and Swiggy?

There are several reasons for uber Eats lagging behind Zomato and Swiggy. Here we will discuss some of them.

  1. Facing Last Mover Disadvantages

Where UberEats started its business in 2017, its competitor was already set its feet in the market. They were almost on the top when Uber began its food delivery business as a newbie. There was a lot of pressure on Uber Eats as being a newbie in the market. Being a latecomer in the food delivery market, Uber faced many challenges which lead Uber to this deal.

  1. Slow Growth

Being a latecomer in the industry with limited resources, made Uber’s growth slow. Where Zomato was serving around 500 cities, Uber was only serving 44 cities at that time. The hyper-competitive market and low-value orders slowed its growth. The food delivery market is not so easy to crack.

  1. Less Funding and High Discounts

When Uber Eats started its business in India, it did not get enough funding from the investors. Even its parent company Uber also didn’t provide enough funding. While becoming stable in the market, Uber Eats needed to follow a high discount strategy. Where the competitors were getting substantial funding; hence they were offering impressive discounts that were making them popular in the market. The massive discounting approach was one of the reasons for its downfall. The company losses around ₹2,197 crores and more debts were following it, which made it difficult for Uber Eats to sustain in the market.  

All in All

There are other food delivery companies also in the market like Foo

panda, Dunzo and many more. But the leading players of the game will be Swiggy and Zomato. In any application-based business, only one brand remains on the top. With the huge success of these applications, online food delivery app development companies are seeing their future in it. The other brand remains for back up, and there is no space for the third one. Any brand which is not on number 1 or 2 face difficulty to sustain in the market and face difficulty to make a profitable and successful business.

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