Sir, When I think of Zomato’s acquisition of Uber Eats, it was purely consolation of the market to surpass Swiggy. It had no relation to the ARPU of Uber Eats, even if it would have been lower, they would have done the same, (maybe at a slightly lesser valuation). They were just marginally behind and that’s how they got in the front seat.
Interesting read, sir! Apart from the cheaper acquisition of Uber Eats (rather than Swiggy) for market consolidation and implied advantages of lesser competition, this made perfect sense for Zomato. With competition from pureplay delivery players like Dunzo, and resistance from restaurants to tie up for lower prices with Zomato - an acquisition seemed to be on the cards for a while now. This can also help improve Zomato's Gold membership ARPUs, (now that restaurants don't seem to have a choice). Leveraging on Uber Eats' delivery platform also means better geographic coverage for restaurants, as well as resultant choice for consumers. Cars should be able to deliver food over longer distances easily, as against their existing bike-based network. Whether it actually improved their ARPU, is something I'd love to read! 🙂
And they did give Limited (t&c apply) Gold membership to UberEats customers who shifted to Zomato after the acquisition. With cars , Uber ran into the archaic RTAs which prohibit goods transport without specific registration !
Killing competition is the easiest way to survive. Uber Eats had anyways a smaller pie of the market and Zomato's acquisition was more of market share decision than anything else (they did not absorb 100 employees of Uber). Geographies where UberEats had better reach allowed Zomato to grow in-organically (users started seeing more of zomato).
Changing gears: While all of this happening, it is becoming more of a Habit shift than the perspective of bridging demand and supply. I think, demand is being created (and pushed), even when there is no need, there is this habit which will help the industry.
Sir! Thanks for this insightful article. It's always a pleasure to hear you and as I read I was envisioning myself sitting in your class and you discussing this. Great initiative and I'm sure I'm going to enjoy DTW & OTW thoroughly!! Looking forward for more coming from your end Sir :)
This is more of a trigger for a broader discussion like what we had at the start of the class ! Do drop in your analysis and perspective whenever you feel like.
I would like to comment on the business perspective mentioned in the article in which I do strongly believe that the after the launch of Uber Eats in the Indian Market the days was something hard for Zomato as they simply have to put a lot more in their advertisement and other cost and at the same time uber eats already had a well established name and platform business running in the market which made the customers move easily from Zomato to Uber Eats mainly because of its first name .And this acquisition will for sure give a market depth in the coming future as I believe that atleast 60% customers which shifted the platform to uber eat will come back to Zomato in the coming days .
More the competition merrier for consumers. More competition will be good for both consumers and restaurants.Looking forward to Amazon making the competition even tougher for both Swiggy and Zomato and the fear is already there as few weeks back Swiggy raised $113 million, by Naspers, an existing investor. This came within a few weeks of Zomato acquiring UberEats India for about $350 million.
Zomato and Swiggy now need a great successful business plan in place to control new entrants in the space and be mindful of the logistics operations and investors money!
Sir Great article !! I think we can use some advice from you to how to find time after a full time job -which is quite demanding at ICFAI , Marathon practice ,family and then writing these articles .
In my opinion ARPU is not the driver here or the motivation behind the merger ,I would just look at that metric from purely an informative point of view .
It’s definitely the synergy that Zomato will get by means of consolidation . It’s becoming more of a monopoly scenario now from oligopoly with no significant player to challenge Zomato now .
Gaining on Market depth is 2nd major factor that I think would have ring the bells at Zomato .
It is really great to learn that we have platform managers and how they work. The article really captures very well the challenge today we(Jaipur Rugs) facing. At present because of lack of technology, that can assess the real ground reality in Village where carpet is produced and the real needs of end consumer (timely delivery and design and colour preference for carpet), we are unable to create real value for both artisans and our end consumer. Really looking forward to hearing from you !
It is really great to learn that we have platform managers and how they work. The article really captures very well the challenge today we(Jaipur Rugs) facing. At present because of lack of technology, that can assess the real ground reality in Village where carpet is produced and the real needs of end consumer (timely delivery and design and colour preference for carpet), we are unable to create real value for both artisans and our end consumer. Really looking forward to hearing from you !
Sir, When I think of Zomato’s acquisition of Uber Eats, it was purely consolation of the market to surpass Swiggy. It had no relation to the ARPU of Uber Eats, even if it would have been lower, they would have done the same, (maybe at a slightly lesser valuation). They were just marginally behind and that’s how they got in the front seat.
There were common users and hence removing one alternative for their common users, the spend by such customers on Zomato platform may go up.
Interesting read, sir! Apart from the cheaper acquisition of Uber Eats (rather than Swiggy) for market consolidation and implied advantages of lesser competition, this made perfect sense for Zomato. With competition from pureplay delivery players like Dunzo, and resistance from restaurants to tie up for lower prices with Zomato - an acquisition seemed to be on the cards for a while now. This can also help improve Zomato's Gold membership ARPUs, (now that restaurants don't seem to have a choice). Leveraging on Uber Eats' delivery platform also means better geographic coverage for restaurants, as well as resultant choice for consumers. Cars should be able to deliver food over longer distances easily, as against their existing bike-based network. Whether it actually improved their ARPU, is something I'd love to read! 🙂
And they did give Limited (t&c apply) Gold membership to UberEats customers who shifted to Zomato after the acquisition. With cars , Uber ran into the archaic RTAs which prohibit goods transport without specific registration !
Killing competition is the easiest way to survive. Uber Eats had anyways a smaller pie of the market and Zomato's acquisition was more of market share decision than anything else (they did not absorb 100 employees of Uber). Geographies where UberEats had better reach allowed Zomato to grow in-organically (users started seeing more of zomato).
Changing gears: While all of this happening, it is becoming more of a Habit shift than the perspective of bridging demand and supply. I think, demand is being created (and pushed), even when there is no need, there is this habit which will help the industry.
One of the perils of Winner Takes All (WTA) mentality is creating a sense of helplessness or FOMO in customers' mind.
Sir! Thanks for this insightful article. It's always a pleasure to hear you and as I read I was envisioning myself sitting in your class and you discussing this. Great initiative and I'm sure I'm going to enjoy DTW & OTW thoroughly!! Looking forward for more coming from your end Sir :)
This is more of a trigger for a broader discussion like what we had at the start of the class ! Do drop in your analysis and perspective whenever you feel like.
Thank you Sir for sharing the amazing article .
I would like to comment on the business perspective mentioned in the article in which I do strongly believe that the after the launch of Uber Eats in the Indian Market the days was something hard for Zomato as they simply have to put a lot more in their advertisement and other cost and at the same time uber eats already had a well established name and platform business running in the market which made the customers move easily from Zomato to Uber Eats mainly because of its first name .And this acquisition will for sure give a market depth in the coming future as I believe that atleast 60% customers which shifted the platform to uber eat will come back to Zomato in the coming days .
This transfer of revenue from UberEats to Zomato is suspect and if they can pull it off then perhaps we would see some ARPU increase for Zomato
More the competition merrier for consumers. More competition will be good for both consumers and restaurants.Looking forward to Amazon making the competition even tougher for both Swiggy and Zomato and the fear is already there as few weeks back Swiggy raised $113 million, by Naspers, an existing investor. This came within a few weeks of Zomato acquiring UberEats India for about $350 million.
Zomato and Swiggy now need a great successful business plan in place to control new entrants in the space and be mindful of the logistics operations and investors money!
Perhaps wait for the next newsletter where I talk about the adverse impact of platforms becoming monopolies !
Sir Great article !! I think we can use some advice from you to how to find time after a full time job -which is quite demanding at ICFAI , Marathon practice ,family and then writing these articles .
In my opinion ARPU is not the driver here or the motivation behind the merger ,I would just look at that metric from purely an informative point of view .
It’s definitely the synergy that Zomato will get by means of consolidation . It’s becoming more of a monopoly scenario now from oligopoly with no significant player to challenge Zomato now .
Gaining on Market depth is 2nd major factor that I think would have ring the bells at Zomato .
It could also be in anticipation of what an ecosystem leader like Amazon would do ! May be "scorched earth" policy !
It is really great to learn that we have platform managers and how they work. The article really captures very well the challenge today we(Jaipur Rugs) facing. At present because of lack of technology, that can assess the real ground reality in Village where carpet is produced and the real needs of end consumer (timely delivery and design and colour preference for carpet), we are unable to create real value for both artisans and our end consumer. Really looking forward to hearing from you !
It is really great to learn that we have platform managers and how they work. The article really captures very well the challenge today we(Jaipur Rugs) facing. At present because of lack of technology, that can assess the real ground reality in Village where carpet is produced and the real needs of end consumer (timely delivery and design and colour preference for carpet), we are unable to create real value for both artisans and our end consumer. Really looking forward to hearing from you !
Wow that's really nice...!