UBER-Expanding: All About the Food
Uber has been a revolutionary brand since its founding and has completely changed the way people travel. It has decimated the taxi industry and changed the concept of “hailing a ride”. By 2018, Uber had over 95 million active monthly users. Many other companies followed Uber, yet Uber had a significant first-mover advantage. The term “Uber” to ride hailing became what “Google” was to internet searches: synonymous. It even became a verb: “I am Uber-ing to the game”. This alternative to public transportation was viewed as a safer, more convenient, more efficient and better way to get around.
In February 2015 Uber launched a new service called UberEats. This service was built on the Uber platform but instead of delivering people to specific places, it delivered food. Once a resturant signed on, people could order food from them and have it delivered right to their home. They could order right in the app, putting all of their choices and orders directly in themselves, taking out the risk of mistakes when ordering on the phone.
While Uber did face some competition from other food delivery apps such as Post-mates, Seamless and DoorDash, Uber had the competitive advantage of their normal app and its large pool of drivers.
When expanding their market into the food delivery business, Uber did face multiple challenges. One surprising challenge was that people were accidentally mixing up the apps and ordering Uber rides rather than UberEats. Another challenge was the different logistics that did not cross over to food delivery. For example, for UberEats, drivers needed to get out of their cars and find parking in order to pick up the food from the resturant. This was especially challenging for drivers in dense urban areas where UberEats was most prevalent.
Another challenge was that some of their early partnerships fell through and went to other companies instead. For example, UberEats was in discussion with Starbucks to make deliveries in specific cities but Starbucks went ahead with Post-Mates instead. This made it very difficult for Uber since these other companies already had a much larger market share than Uber did.
Some additional challenges were that originally Uber drivers did not want to switch over to UberEats and Uber needed to go hire separate drivers for UberEats. There were differences in peak hours between driving people and food delivery with a busy delivery time between 10am and 2pm as well as Uber’s 24/7 availability vs UberEats which stopped working at 10pm.
Uber did many things very well to overcome these challenges and gain an approximately 30% of the food delivery market. They were able to leverage their driver network and use their competitive advantage and convince many of the driver to also drive for UberEats.
However, I think there are a few things Uber could have done better when expanding UberEats. I think that they should have started UberEats 24/7 as opposed to closing at 10pm. I think this would have opened up many more opportunities for them and would have allowed them to scale faster since drivers who are driving at those times anyways would have been able to do both Uber and UberEats. This also would have opened up UberEats to the large “late night eaters” market.
Another thing UberEats could have done sooner was buy/partner with another food delivery service to gain a starting marketshare in the food delivery market. UberEats ended up acquiring Post-Mates for $2.65 Billion which allowed them to expand and take a controlling marketshare and provide service to a much larger area. Doing this sooner could have allowed them to build a more complete and wider business much sooner.
Uber is a tribe. They urged and pushed their tribe to go further and accept change and it worked. UberEats was created. And it is even more of a tribe than Uber. The loyal UberEats user books 11.5 deliveries per month vs just 4.9 bookings per month for Uber. According to Seth Godin, Uber did an amazing job challenging their users to use their expansion of UberEats. They spoke to their base, who’s attention they earned — people with shared interests and goals — people who want convenience. They people became an even more loyal base for UberEats — the expansion that took the world by storm.
Additional Sources:
https://www.eater.com/2015/6/16/8788929/uber-ubereats-food-delivery-struggle-business-restaurant
