Uber Eats recorded a decline of 4 per cent in its fee or commission in a year-over-year basis, Uber's chief financial officer Nelson Chai said during Q1 2019 earnings call with analysts.
The cash guzzling hyper-competitive food delivery market in India, which has Zomato and Swiggy engaged in a bruising battle for large market share, has also dragged down Uber Eats’s take rate (fee or commission earned from orders).
Uber Eats recorded a decline of 4 per cent in its fee or commission in a year-over-year basis, Uber’s chief financial officer Nelson Chai said during Q1 2019 earnings call with analysts.
Pointing to the 400 basis points decline in Uber’s “adjusted net revenue as a percentage of gross bookings” to 18 per cent, Chai said it was primarily because of Uber Eats that has a “lower take rate than ridesharing, growing as a percentage of the core mix.”
“In particular in India, we increase incentives to consumers, drivers and restaurants drove nearly half of the year-over-year decline in Uber Eats take rate to 8 per cent from 12 per cent a year ago,” he said.
India is not just among the key markets for Uber but it is also the “fastest-growing country” as the company has “recorded an over 50 per cent month-over-month growth covering 28 cities and 12,000 restaurants,” Uber’s chief international business officer Brooks Entwistle had told The Indian Express in September last year.
“It’s (India market) growing very, very quickly. There two competitors that are very aggressive on it including ourselves. We are doing well on holding our own but it is a net market in that we are funding both the eater, the courier, as well as the restaurant in terms of building the business,” Chai said.
Uber reported a whopping 116 per cent increase in its losses from $478 million in Q1 2018 to $1 billion in Q1 2019 while revenue increased only 20 per cent to $3.1 billion from $2.5 billion in Q1 2018.
Among the key cost drivers for Uber included $1 billion spent on sales and marketing, $1.6 billion as cost of revenue, and $434 million towards operations and support.
The food delivery is also ripe for further consolidation following Ola’s acquisition of Foodpanda in 2017. Recently there were reports about Swiggy’s acquisition of Uber Eats India but that didn’t go through. While India remain Uber’s biggest market, the company’s global CEO Dara Khosrowshahi acknowledges that consolidation will be there without specifically hinting towards India.
“I think there will absolutely be consolidation. We are not in a hurry in that. I think that whether consolidation happened sooner or later, we will be kind of the biggest player on a global basis, said Khosrowshahi. Nonetheless, “it’s kind of a plan B, because our plan A, which is an organic plan is a great plan and we feel very strongly about it.”