What Went Wrong With Uber Eats In India?

Uber Eats came into existence in 2014, when Travis Kalanick and Garrett Camp, the founders of Uber, were thinking of growing their business. Uber Eats is an online food delivery platform introduced by Uber. Its headquarters are in San Francisco, California, U.S. Users can read menus, reviews, ratings, order, and pay for meals at participating restaurants using an app on iOS or Android forums, or through a web browser.

With a well-established market share in the US and other major players in the food delivery industry like Doordash, Grubhub, and Postmates, Uber Eats saw a good opportunity and decided to expand its business abroad and that is why it chose India as one of its destinations, as it is a populous country with great potential as well as an affinity towards food. So, finally, Uber Eats was launched in India in May 2017 with the promise to transform the industry and started operating in the country’s financial capital, Mumbai. Bhavik Rathod, then Head of Uber Eats India, said in a statement that Mumbai is home to a thriving food industry with a vibrant food culture that provides global and local cuisines and launching Uber Eats in India, Mumbai as the first city, was a major step forward in their worldwide expansion.

Before every Minima there is a Maxima:

Uber Eats rapidly expanded its trajectory in a couple of years in India they had acquired a 12% market share in partnership with thousands of restaurants, from local heroes to the best in the world, offering a wide variety of food, from burgers to biryanis, from pasta to paranthas, dimsums to dosas. Uber Eats gained popularity from consumers in a total of 44 cities in India to order food of their choice with the click of a button.

Piggybacking at Uber also had benefits for Uber Eats. The growing consumer base of their leading business helped Uber Eats decide on new markets and sub-markets. Data points from the cab business, such as rides and booking density in certain areas, combined with available restaurant data, helped the company estimate the potential demand.

The company launched a new '#EatsNewEveryday' marketing campaign featuring Alia Bhatt and Dulquer Salmaan, which was a big step as even the two biggest players in the Indian food technology industry - Zomato and Swiggy - had not yet endorsed their brands with the help of celebrities. The one-month campaign was aimed at consumers between the ages of 18 and 25 and was featured in various media outlets. The aim of this campaign was to raise awareness and create a brand of love for consumers, especially young people who want convenience.

UberEats had established 30 percent of the southern market share, second only to Swiggy, which dominated with a 55-60 percent share and Zomato was a distant third while its total market share in India was 12 percent, third after Swiggy and Zomato, each with 43 and 40 percent of market share respectively. The company was optimistic about its future and had major expansion plans for its future business operation in India.

The Downfall:

After less than three years of its existence in the Indian food delivery market, UberEats discontinued its services and was acquired by local food giant Zomato. There were many factors behind the devolution of UberEats such as:

 • Competitive nature of the market

 • Lack of Uniqueness

 • Late entry into the market

 • Presence of local big brands Swiggy and Zomato

 • Dimmed social media strategy

The local giants, Zomato and Swiggy, had already carved their way into the phones of the users and had acquired adequate control over the food delivery domain when Eats debuted in 2017. Although Uber Eats had the advantage of bringing in the 'global experience', the Indian market is very different from the rest. Also what gave their competitors an edge are factors like having an interactive app where customers can share photos, review food items and buy groceries, do restaurant bookings, and much more.

Uber Eats had zero distinction from the beginning. They had no USP- a lack of distinct identity. Entering a market late with no product differentiation was overall a very risky venture. Also functioning with minimum funding, fighting against stronger competitors, and offering deep discounting were some of the factors that led to its failure. Besides, Uber Eats failed to build relationships with restaurant partners. They were reported to have hired third parties to manage the restaurant accounts where most of the businesses are driven on a relationship basis approach in the Indian market space. They could have improved and been more consistent like Zomato and Swiggy on social media with new creative ideas and marketing campaigns. The dearth of an exclusive offering, high commissions, and low visibility also forced the restaurants to switch their business to other platforms.

Mitigation strategies applied by the Company:

Uber Eats became the first food aggregator to have a star ad campaign with Alia Bhatt. She was on-boarded as their brand ambassador making them the only food delivery brand in India to get a celebrity involved in its marketing communication. Although the brand campaign secured the first spot on the list of Top 10 Most Watched Indian Ads on YouTube, it was not very wise to spend loads of money in a business that has cut-throat competition. In addition to that, Eats relied heavily on giving discounts in order to gain and retain customers; which eventually backfired. A deep discounting strategy is never sustainable since customers keep benefiting from such strategies but none of the market players win in the battle of dominance. According to experts, one of the main reasons for Uber Eats failure was its heavy discounting strategy which ultimately led to its downfall. The operational losses rose to ₹2,197 crores, other debts followed and an aggressive market did not let it stay afloat. The incumbents had a better business strategy, more spending power, and aggressive business expansion compared to Eats.

To plan to appeal to a high volume of app downloads and in turn settle for a lesser margin did not lure merchants to get listed on the app. Furthermore, most of the restaurants were already listed on Zomato and Swiggy. Also, the food delivery business as a standalone is not much profitable for anybody, therefore firms try to expand into other operations and services. Uber eats should have brought something unique or different to the table than their competitors and focused more on building meaningful relationships with restaurant owners than just piggybacking on the brand name of their already established rides business. Moreover, in order to survive in this space one needs to keep evolving and branch into other spaces as well.

Conclusion:

It can be safely established that any food delivery market across the globe is a hard nut to crack but with over 3 million meals delivered across the country daily, the Indian food delivery market is considered one of the most challenging markets to ace. It is not at all astonishing that UberEats was not able to survive in the Indian market with two major giants already competing with each other.

In any app-based delivery brand, there can be only one brand always on the mind for consumers, alongside one more as a backup. Hardly ever there will be a room for 3. As part of the deal with Zomato, Uber has a 9.99 % stake in the company which is still better than nothing. While its entity ceased to exist, it’s definitely not out of the game and will continue to ride the wave of success the Indian startup(Zomato) is enjoying - but this time as a backer, instead of being a loss-making rival. Moreover, this deal would also allow Uber to focus on its main strength and stick to what its expertise is, in terms of being an aggregator of cabs. Overall, the case of Uber Eats highlights the struggles that food delivery brands face to survive in India.