SUMMARY
UberEats may pick up a 10% stake in Swiggy
Ola recently changed its focus to Foodpanda’s cloud kitchens
The deal may close by next month
UberEats maybe in talks with Swiggy to divest its business by taking 10% stake of India’s fastest foodtech unicorn. This would be the first divestment of Uber’s food business, even though it has exited a few key mobility markets in South East Asia in the last year to control its losses ahead of its much-talked-about $120 Bn IPO.
An ET report which broke the development said that it makes sense for UberEats to be invested in Swiggy than burn capital competing for the same set of restaurants and consumers. Post-acquisition, the heavy discounts being offered by UberEats may fall significantly.
It is also being speculated that UberEats India racked up a cash burn of around $25 Mn on an average 9 Mn orders a month, while Swiggy burns about $40-45 Mn a month on its food business.
UberEats was also in talks with Zomato, however, the discussions reportedly failed.
In an email response, Swiggy spokesperson declined to comment on rumours/speculations, while an email query sent to UberEats didn’t elicit any response till the time of publication.
A recent RedSeer FoodTech Leadership Index (FLI) ranked Swiggy at the top place with a total score of 96 in the fourth quarter of 2018. Its arch-rival Zomato came in second with a score of 82.
This was followed by UberEats at the third place followed by Ola’s Foodpanda.
Recently, in January, Ola’s Foodpanda cut marketing and customer acquisition costs by two-thirds, in line with Ola’s de-prioritisation plan for the business in terms of investment. It will now focus on its own private labels and cloud kitchens which include The Great Khichdi Experiment, Lovemade and FLRT brands, and continue to leverage Ola’s base.
However, the top two players— Swiggy and Zomato— have been busy raising funds and expanding their portfolio services. With billion dollar fundings and billion-dollar GMV and more, the competition in the food-delivery market is now moving towards private labels and cloud kitchens.
With the online food delivery market estimated to be worth $19 Bn at present, the market has been driven primarily by continued discounting offered by the competitors.
[The development was reported by ET.]
