Consolidation in the food delivery sector continues. Today, Uber said it was selling its Eats business in India to local rival service Zomato, according to an article from TechCrunch. The deal, which is valued between $160 million and $200 million, is effective immediately.
The two companies have been in talks since November of 2019. With the deal, Uber will own a 9.99 percent stake in Zomato. It will shutter all operations in the Indian market, with Eats customers and restaurants becoming part of Zomato. According to TC, some Eats employees will have the option to join Uber’s ride-hailing service. The rest will be let go.
For Uber, a big part of the motivation behind the sale is to cut back on loss-making operations as it struggles to reach profitability by 2021. The company’s Eats business launched in India in 2017 but faces strong competition not just from Zomato but also another local service, Prosus-backed Swiggy. Both those competitors fulfill well over 1 million orders each day, while Uber Eats only does about half a million.
The move to shutter operations in India is similar to Uber Eats’ decision in September 2019 to shutter operations in South Korea, where Woowa Bros.’ food delivery service Baedal Minjok owns 75 percent of the market share.
Meanwhile, both competition and consolidation worldwide in the food delivery sector continues to intensify. In Europe, Uber Eats will have to contend with Just Eat and Takeaway.com, two companies merging to become one of the largest food delivery services in the world. Deliveroo is also a major competitor in that market. In the U.S., Uber Eats still lags behind DoorDash and Grubhub in terms of marketshare.
All of these companies face an increasing amount of pressure to become profitable. And given the trend towards consolidation happening of late, India might not be the last market Uber Eats bows out of in the near future.
This is a very big move the Indian company where zomato is going to consolidate the market share of uber’s 30% to gain upto 60% share as a consolidation to beat Swiggy. This is common strategy being used by many corporate to win the rivalry. Kudos to #Zomato.