Uber’s Path to Platform Dominance
Rise of the Super App: Part 2
Uber wants to become “An Operating System for Everyday Life”. In my last article, I highlighted how out of the food delivery apps, they are the most likely to head down a full platform path:
An Acquisition
Fast forward 2 months to July 6th: Uber to Acquire Postmates for $2.65 billion in an all-stock transaction.
Combination of platforms to provide more choice and convenience for consumers, increased demand and tailored technology offerings for restaurants, and new income opportunities for delivery people
This is a smart move by Uber to break the tie with Grubhub. With this acquisition they will be the 2nd biggest player in the food delivery war.
A Partnership
And then the next day (July 7th), Uber announced they were moving into the grocery delivery market, starting with a partnership with Cornershop:
Defensibility
With extreme competition on both the ridesharing and food delivery side, brand loyalty only goes so far. For food delivery, at the time of writing on average only 50% of customers are exclusive to one service. If I use Lyft, Instacart and DoorDash separately and Uber can do all three at once for the same price, the appeal is greater.
Grubhub’s CEO has cited “promiscuous customers” as a hindrance to his company’s growth.
Uber’s main defensibility was previously a combination of brand and scale. But, as we saw in China (DiDi) and Southeast Asia (Grab, Go-Jek) — you can lose that battle. Consolidating the food delivery market and expanding into the grocery market is a great platform play to expand the Uber ecosystem and build a more defensible moat.
A… Boat?
At the same time, Uber are expanding on the transportation front. Uber Boat is a new partnership with Thames Clippers in London. This is an attempt to diversify transportation options as Covid-19 continues to affect ridership. These ferries have been presented as a potentially safer option to crowded underground train carriages as London looks to re-open commuting safely.
Targets Acquired
With the pandemic still on the rise, as of mid-May rideshare for both Uber and Lyft was down up to 86%. It will be interesting to see if an increased platform play helps Uber recover from this drop faster than Lyft in the long term.
I expect to see big wins this quarter from Uber on food delivery market share, and now also on grocery delivery. As Uber continues towards platform dominance, Instacart and Doordash are the most vulnerable competitors in their sights right now.
