Sunday, October 2, 2016

UberEats bites into European food delivery market

Uber is aggressively expanding its food delivery service across Europe, the Middle East and Africa, in a move that takes on local players such as Dutch company, which goes public later this week.
The San Francisco-based car-hailing company announced that UberEats, its takeaway delivery arm, will launch in European cities including Amsterdam, Brussels and Stockholm, as well as farther afield in Dubai and Johannesburg. The company is also advertising for UberEats general manager roles in countries including Germany, Spain, Italy, Switzerland, Austria and Denmark.
As it expands, Uber will take on European market leaders such as Berlin’s Delivery Hero, Britain’s JustEat and, which aims to raise €175m through an initial public offering in Amsterdam.
The regional start-ups have been doubling down by consolidating assets and raising funds to stay ahead of US companies, such as Amazon and Uber, which are moving into the food business.
JustEat offloaded its Benelux business to earlier this year for €22.5m, while the reverse occurred in the UK, when the Dutch start-up sold its assets to JustEat.
These two players just take orders, rather than tackling the heavy cost of delivery, resulting in a battle of business models.
“Logistics is a very different business. If you look at profit margins, it is more of a challenge,”’s boss Jitse Groen told the Financial Times earlier this month.
“I do not see the benefit for Uber of moving into food delivery: food gets cold and it’s the same time people need to move. We do take it seriously because they have money; but I do not see why they are in a better position than, say, JustEat.”
Uber believes it has a huge competitive advantage compared to local companies. “Uber has been delivering people around cities for years, we are a key part of the infrastructure and we know how cities move,” said Jambu Palaniappan, general manager for UberEats in Europe, the Middle East and Africa.
“We are not a marketing platform or an aggregator. Restaurants know we are experts at providing transport and logistics, and no one is better positioned to deliver efficiency and cost savings.”
Analysts believe Uber could grab market share, although it faces challenges.
“I’ve spoken to a number of restaurants who were approached by Uber when they entered the UK market and they said they didn’t need any more orders,” said Bob Liao, equity analyst at Macquarie Group in London.
“During peak hours, popular restaurants are switching off most of these marketplaces because [their] priority is serving seated customers.”

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