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Uber hints at brutal delivery market, in Scoreboard


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An IPO filing from Uber shows just how competitive the delivery world is for restaurants and retailers.

Ahead of the ride-sharing and logistics giant’s likely May IPO, Uber opened up the books and showed how much potential exists and how competitive delivery really is.

Outlining the industry for UberEats in a pre-IPO filing called an S-1, Uber pegged the overall off-premises addressable market (including home delivery, takeaway and drive-thru worldwide) at $795 billion. In 2018, the company reported $7.9 billion in gross bookings or topline delivery sales—1 percent of the global delivery market. Uber also projected that these orders would be less incremental as UberEats usage grew. “We also believe that home delivery can address a portion of the $2.0 trillion eat-in restaurant spend,” read the document.

Uber pointed to Euromonitor statistics that showed consumer spending on home delivery saw growth of 77 percent year-over-year since 2013—much faster than the 5 percent growth of consumer foodservice overall.

In 2018, UberEats gross bookings rose 164 percent over 2017, and revenue for food delivery increased 149 percent to $1.5 billion. But that growth mismatch offers a glimpse of how UberEats is changing as the delivery industry continues to grow. The document highlighted Uber’s penchant toward brand partnerships that come with lower service fees than independent restaurant operations. That drove the take rate or income down to 10 percent in 2018 from 12 percent in 2017, showing the company is willing to cut fees to compete for big brands with the likes of Grubhub, Postmates, DoorDash and others; which are taking their own paths to scale.

This all comes with a big caveat: Uber, like every third-party delivery company, is unprofitable. And Uber may get further from profitability as it pushes to scale ahead of competitors. According to the document, Uber expects “our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.” The company reported operating losses of $4 billion and $3 billion in 2018 and 2017, respectively, and has an accumulated deficit of $7.9 billion. The company looks to generate an additional $10 billion for the company and billions more for equity holders when it officially begins trading.

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