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Food delivery began as an experimental side project for Uber. Now, it’s the company’s biggest line of business, and one of the foundations of CEO Dara Khosrowshahi’s strategy to turn Uber into the Amazon of local commerce and transportation.
But Uber has not been the only one pursuing a market that has exploded as the COVID-19 pandemic has limited the opportunities to dine at restaurants. Food delivery has become increasingly competitive, with rivals like DoorDash and Grubhub spending aggressively to attract and retain customers.
Though Uber’s delivery revenue continues to grow, its market share in the segment has ebbed and flowed over the years. DoorDash took Uber’s lead in the food delivery market in 2019 and has been building on it ever since.
Here’s how Uber has grown its delivery business over the past seven years while taking on DoorDash and other rivals.
Uber started delivering food in 2014
According to a 2018 report from The Information, former Uber CEO Travis Kalanick hired Jason Droege in 2014 to develop a service that would complement the company’s ride-hailing business.
Droege experimented with deliveries from corner stores and other local businesses, but noticed the popularity of one-time promotions involving food. In 2014, Droege launched Uber’s food-delivery efforts in Los Angeles, offering soup and salad from the fast-casual chain Tender Greens.
A new strategy helped Eats take off
Uber’s new business, originally called Uber Instant, went through growing pains. Bill Gurley, a general partner at Benchmark, then Uber’s largest investor, even suggested Kalanick exit the food-delivery business as its losses widened, The Information reported. (Gurley denied that he opposed Uber’s food-delivery efforts.)
A new strategy helped the business take off. Kalanick’s original approach was to buy meals before customers ordered them so they could be delivered faster, but that limited the number of options available to customers while creating for Uber the added challenge of trying to predict demand.
Droege, The Information reported, believed Uber should adopt a model similar to the one DoorDash was using, where customers could choose from a wider range of options that restaurants would make after the order was placed — even if if meant longer delivery times.
Kalanick approved the new strategy in late 2015. In the following years, Instant, renamed Eats, grew quickly.
App tweaks made Eats more accessible while encouraging loyalty
As Eats became more popular, Uber made a few moves designed to make the service more accessible to ride-hailing customers …read more
Source:: Business Insider