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Case Study 3 – Uber sells its Uber Eats business in India to Zomato
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- Why Did Uber Sell Uber Eat India to Zomato
Case Study 3 – Uber sells its Uber Eats business in India to ZomatoIntroduction“Uber Technologies, Inc. (Uber) is American mobility as a service provider. It is based in San Francisco with operations in approximately 72 countries and 10,500 cities. Its services include ride-hailing, food delivery (Uber Eats and Postmates), package delivery, couriers, freight transportation, electric bicycle, and motorized scooter rental via a partnership with Lime, and ferry transport in partnership with local operators. Uber does not own any vehicles; instead, it receives a commission from each booking. Fares are quoted to the customer in advance but vary using a dynamic pricing model based on the local supply and demand at the time of the booking.” (Wikipedia) Zomato bought the UberEATS business in India in the year 2020 in the amount of $350M with the exchange of 9.99% equity in Zomato. (BBC News, 2020). The Indian food tech sector will be worth over $8 billion by 2022, up from $4.6 billion in 2015. (CNBC,2022). Ubereats had a 12 percent total market share in India in 2018, ranking third after Swiggy and Zomato. In 2018, Zomato was the industry leader, with a 23 percent global market share. (Ananya, 2019). Why Did Uber Sell Uber Eat India to Zomato?Foodtech business has been a cash-burning business from the beginning. The ubereats made losses of nearly $85M till 2019. (Ko Tin-yau, 2019). In China, UberEats sold its business to china's market leader DIDI. (Henry, 2018). After the china operation, Uber sold its South East Asia operation to its competitor Grab in exchange for 27.5% equity. (BBC, 2018). In 2018 Uber merged with Yandex in Russia. (BBC, 2018). In September 2019 Uber also was out from South Korea. One reason for the decision of selling or merging with other companies could be quite a global pattern. Uber lost $5.9 B in its first IPO in India within three months. (Peter,BBC, 2018) At the same time, Zomato’s valuation has increased to $3B because of its market shares in India. With the heavy loss in the company, they were unable to provide job security to its employees which was again Uber's value. Download 433.31 Kb. Share with your friends:
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