Competition continues to heat up in the food shipment wars. In the latest development, Uber today announced that it has obtained Postmates in a $2.65 billion, all-stock deal. It prepares to run business together with its own food shipment company, Uber Consumes, keeping the Postmates app running while combining some of the tech and shipment operations at the back end– for example, by having chauffeurs providing orders for both companies.
The deal confirms reports that emerged recently, and got re-reported last night with more financial information, that Postmates and Uber remained in negotiations. That deal itself emerged in the wake of Uber failing to acquire another rival, Grubhub, which was instead acquired by Europe’s takeout leviathan Simply Consume Takeaway for $7.3 billion.
” Uber and Postmates have actually long shared a belief that platforms like ours can power much more than simply food shipment– they can be a hugely essential part of local commerce and neighborhoods, all the more important throughout crises like COVID-19 We’re delighted to invite Postmates to the Uber household as we innovate together to provide much better experiences for consumers, delivery people, and merchants throughout the country,” said Uber CEO Dara Khosrowshahi in a statement.
Signing up with forces with Uber will continue that objective as we continue to develop Postmates while producing an even more powerful platform that brings this objective to life for our clients. Uber and Postmates have actually been strong allies working together to promote and produce the finest practices across our industry, particularly for our couriers.
Uber in its news statement explained Postmates as “highly complementary” to Uber Consumes, citing the two companies’ differing geographic focuses and target demographics and keeping in mind that Postmates has strong relationships with little- and medium-sized dining establishments and other businesses that are devoted to the Postmates brand, which covers not just food however delivery of other items, too.
On the other hand, Uber noted that together they’ll develop better tools and technology for their merchant and dining establishment partners, which these will have a larger user base now to tap. That last point rather contradicts the lack of overlap in between the two, so we’ll need to see how that really plays out.
The all-stock offer assessment that Uber is paying is a small bump on Postmates’ last appraisal of $ 2.4 billion, which it reached in September 2019 on the back of a private equity round (it had actually raised simply over $900 million in total over 10 years). But with the “money” all in paper, it puts a great deal of pressure both on Postmates and Uber to continue to deliver on growth– pun meant.
For Uber, Uber Eats has actually been one excellent news story amid what has otherwise been a very hard life as an openly noted company. That circumstance has actually handled a more critical edge in current months through the COVID-19 pandemic.
In its last quarterly profits results, the Uber Consumes service grew 52%and handled to rather offset a big decline in its ride-hailing profits. In both cases, you can draw the line from the results to social distancing requirements that individuals have actually been following around the globe: consumers have been staying at home more and purchasing take-out food to be provided to them; and at the same time they have actually been staying away from shared, little areas, such the ones that you might come across in an Uber flight. However, with the boost at Uber Eats, the company lost $3 billion last quarter.
The trend of those numbers is one reason Uber has been wanting to broaden its food delivery organisation. The other is the one that has been motivating the larger debt consolidation pattern in food shipment, and that is the concept of economies of scale and how that plays out in regards to functional expenses, with single drivers able to cover more dining establishments and orders, and also the expenses of running business.
The broader organisation model needs a great deal of subsidising to grow, so securing a competitor rather decreases that type of costly competitive pressure. It does not eliminate it totally, though: DoorDash and Grubhub (now turbo charged with Simply Eat Takeaway earnings and monetary muscle) are still around and will represent strong alternatives both for customers and restaurants looking for shipment partners.
The general public markets is a hard location to play out a growth story for a company that is still profoundly in the red like Uber. In that regard, it’s a paradoxical location for Postmates to land.
There were reports even as just recently as last week that the company was still considering this option, in retrospect, that was quite perhaps a report planted and spun by those hoping to hedge a much better deal out of Uber.
TechCrunch.
