- More than a decade after Uber Technologies launched its ride-sharing services in San Francisco, the company remains a pioneer in developing transportation services worldwide with operations in 67 countries
- The company’s ridership has plummeted this year as a consequence of the novel coronavirus pandemic, however, leading Uber to expand other potential sources of revenue as consumers’ use of remote-access delivery services grows
- Uber’s Eats and Freight divisions have seen a rise in traffic as a result of the pandemic-altered trends, and Uber launched two new courier services in the spring to increase its foothold in the arena
- Most recently, Uber announced it is working with rival Postmates Inc. in an acquisition bid expected to close next spring to sustain Uber’s second-place market share in restaurant delivery services as competition heats up
- Many countries outside the United States are now reporting significant declines or virtual elimination of the virus, spurring hopes that normal Uber economic activity might soon resume there
Pioneering rideshare transportation business Uber Technologies (NYSE: UBER) is building its resourcefulness by expanding the array of services it provides to consumers. The novel coronavirus pandemic has taken a huge bite out of UBER’s annual revenues, but the company’s $2.65 billion all-stock deal to buy rival Postmates Inc. is expected to boost its ability to compete in the restaurant, groceries and other staples delivery market.
In an investor call July 6, Uber CEO Dara Khosrowshahi cited the potential for new customers using the company’s expanding delivery services to also eventually help revive the flagship ride-share business as they become familiar with Uber’s operations, according to a Wall Street Journal report (http://nnw.fm/U0v1x).
Bookings for Uber’s Eats division are already helping to shore up the company’s bottom line, rising to more than double during the second quarter over what it brought in during the same period the previous year, according to the report. Postmates, likewise, saw an increase in its gross orders of 50 percent, mostly due to restaurants.
Several restaurant delivery businesses are trying to welcome grocery delivery customers as the pandemic heightens the popularity of remote access services of all types. Uber previously obtained a majority stake in grocery delivery company Cornershop, and Postmates brings in partnerships with companies such as Walgreens’ and Rite Aid’s global drugstore parent and 7-Eleven’s global convenience store parent.
Postmates has strong footprints in Los Angeles, Las Vegas, Phoenix and other cities in the U.S. West and South. The deal with Uber would make Uber the second-largest restaurant delivery service in the United States by market share, securing its position above Grubhub Inc., which Uber unsuccessfully attempted to acquire earlier this year, according to research firm Edison Trends (http://nnw.fm/i2SKw).
Khosrowshahi predicts competition in restaurant delivery services, fueled by the pandemic, will last for years in the United States. That is driving Uber’s interest in expanding its to-go delivery options and could eventually lead it into jostling with retail delivery giants Amazon.com and Walmart.
“The category and markets are going to start overlapping with a lot of other players,” he told investors.
The company’s entry into the courier market by launching Uber Direct retail package delivery and Uber Connect person-to-person package delivery in the spring also played a part in helping the company find renewed favor in the eyes of investors (http://nnw.fm/D62Po).
Uber’s deal with Postmates is expected to close in the first quarter of 2021, which it believes will yield $200 million in cost savings, mostly due to reductions in sales, marketing and other administrative costs.
Uber is also moving to reduce costs by shifting its engineering jobs to India. Uber India was among the company’s sectors hit by large-scale layoffs in the spring as the pandemic caused ride-share business to plummet, but Uber has emphasized its satisfaction with the engineering and product talent based out of Bengaluru and Hyderabad and Khosrowshahi has expressed an interest in continuing to derive innovation from India, according to Business Insider India (http://nnw.fm/6Dpjp).
“One example is the Uber Lite app, (which) was designed and built in India and moved to over 30 countries around the world,” Khosrowshahi said.
Many countries around the world have also seen successes in curbing and virtually eliminating the spread of the coronavirus (http://nnw.fm/NlDr9), spurring hopes that Uber’s ridership numbers might soon begin to recover globally.
For more information, visit the company’s website at www.Uber.com.
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