UberEats: An Online Food Delivery that Failed

Online Food Delivery
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Uber Eats: An American online food ordering and delivery platform

Uber Eats: Online food delivery shocking failure  in India!
Uber Eats: Online food delivery shocking failure in India!

Uber Eats, as we know, is an American online food ordering and delivery platform launched by Uber in 2014 and based in San Francisco, California.

Its journey began in India in 2017 and was acquired by Zomato, an online food delivery company, on January 21, 2020, for ₹2,485 crores. As its business ceases to exist, Uber Eats buyers, restaurants, and delivery partners will now be directed to Zomato. However, the purchase left more than 200 employees on the cliffhanger.

The acquisition of Zomato started in 2008 and now has over 40 million users. Swiggy, on the other hand, started in 2013 and has recruited 42 million users. Swiggy is also an online food delivery company. Uber Eats, launched just three years ago, had more than 10 million users. And with the huge consumer base of Uber Eats in its kitty, Zomato will now have control over 50-55% of the food delivery market. That’s amazing right!

Zomato and Swiggy
Zomato and Swiggy: Online food delivery companies

Experts point out that one of the reasons for Uber’s downfall was their tough discounting plan. The operational losses amounted ₹2,197 crore, followed by high debt and a heavy competitive market that did not allow it to continue.

As Uber Eats hits its edge and meets Zomato, let’s see what the experts have to say as to how the platform could have done differently to stabilize it and test whether playing its marketing game before would’ve helped prevent this bullet.

Increases audience contact frequency

Increases audience contact frequency

Uber Eats has ridden Alia Bhatt as its brand ambassador – the only online food mix in India to find a celebrity involved in social media. However, it launched its first product campaign two years later – in January 2019 called ‘Everyday Moments”.

Remember that ‘tinde’ wala ad?’ According to Voodly, it garnered more than 50.3 million views by the end of January and ranked first in the top 10 list of the most viewed Indian ads on YouTube.

Karthik Srinivisan, Social Media and Brand Expert, says “There is not much food addicts can talk about so their communication strategy cannot be blamed.”

Ads can be about ‘variety, fast delivery, customer care service after delivery, order UI / UX, payment options, loyalty program, promotions, etc.’

Gone are the days when brands were waiting for some crucial moments of a major media splash. Now it’s all about getting involved in everyday conversations, listening to what your customers have to say, and working on social media is inexpensive either. Shrinivasan thinks the Uber Eats weren’t as consistent as Zomato and Swiggy here.

Srinivasan also added, “To be in the top-of-mind recall in such a category, the brands need to continuously be in the buzz. Zomato and Swiggy have cracked that code to a large extent, always being in the social buzz one way or another.”

However, Srinivasan says the real reason is unplugging Uber Eats’ support system.

He explained it by saying, “Beyond all this is the investors’ appetite to continue funding these businesses despite losses. At some point, they may want to pull the plug to cut their losses and that could be the bigger reason for the sale”.

“Read about the amazing success story of another food giant – Yum

N Chandramouli, CEO, TRA Research feels that Uber Eats did not offer anything different from its competitors and its USP was not very clear on communication.

According to him “Other than the fact that they used a celebrity for endorsements, I think the ads did not communicate much. With a greater number of restaurants available on the competing apps, the promise of variety or choice, felt lame.”

Chandramouli balances Zomato’s communication strategy with great skill in the category, followed by Uber Eats and then Swiggy.

The evils of the passage of time

The evils of the passage of time

The Founder and Director of Almond Branding, Shashwat Das thinks the reasons for the collapse of Uber Eats have more to do with the business model and the strengths of the segments than its communication strategy.

According to Das – Two of the biggest online food delivery players in the market, Swiggy and Zomato, have already reached the top in 2017 and now they are only competing with major restaurants. Uber eats had to rely on heavy reductions to find and retain users and a deep discount strategy would not be sustainable as the consumer continues to benefit but none of the market players win the battle for dominance. Last-miles delivery is a hard-working, low-profit business where most startups have failed due to lack of knowledge, expertise in the field, and funding.

As Chandramouli said, “Uber knows from its cab hailing experience that any app brand that is not number 1 or 2 in the country it operates in, will find it difficult to be a successful and profitable business. In any app-based delivery brand, only ONE brand remains top-of-mind for consumers, with one more kept as backup. There is rarely room for a #3.”

“Here’s an amazing article on “Mobile Marketing and Advertising” of an Indian Startup – InMobi”

Some restaurants in India still offer free online food delivery to homes without pricing medals and Das thinks the food market is not easy to break down.

Downloading multiple apps, building new relationships and resolving wage cuts didn’t make it too powerful for restaurant partners.

When an app signs a vendor, the regularity of the business determines how important the delivery app is in this restaurant. Also, those in charge were more focused, using more power and violence than Uber Eats.

With Uber Eats India accumulating more losses than Uber, its concern for its sister has added to the pressure from international investors in the wake of their poor IPO, which is the only good thing you can do for Uber to probably reduce losses and focus on its portfolio.

Developing a unique identity

While the main idea of Uber Eat was to bring the piggy-back to Uber’s image and use its established network, Chandramouli suggests that this was not a wise move as it affected Uber’s disruptive position.

He thinks they should have started a online food delivery business under a different brand.

Honestly, the respectable Uber’s cab app is always seen as the founder and leader, but with the launch of Uber Eats, it almost looks like his brand or a copy of his brand, hence losing its new shape.

Another danger of extending Uber’s product to this new business is that the cab lift business requires a more involved and closer consumer decision, and the online food delivery system has not done so.

Thanks to the strong support of Swiggy and Zomato, they had limited bandwidth to establish and offer discounts. However, their main focus is on food delivery, while Uber on the other hand, travel. Das thinks this could be one of the reasons why it was set aside and cut off from the well when it came out dull.

But was it a wise move for Zomato?

According to media reports, Uber will receive a 10% stake in Zomato from an agreement that valued Uber Eats $300-350 million.

“It was a bad deal for Zomato I think, giving away stock worth 300 million USD, to a company struggling to stay afloat. I think Swiggy will gain from this. And for Uber, of course, this seems to be their long-term strategy of buying into local food compaines,” said Shubho Sengupta., Brand Consultant.

“There is no economic crisis for those who order on Zomato. They are in the top 15% earners of this country,” Sengupta said.

Now all eyes are on Swiggy and Zomato

While Dunzo and Food Panda were also present on the battlefield, the horse race would continue between the two bulls – Zomato and Swiggy. This combination, expert’s opinion, will bring more financial discipline, encourage them to be more creative, and get the much-needed technical support in their parent companies.

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