UberEats Is Earning More Than Its Ride-Hailing Counterpart

Uber Eats | Photo From: Joe.ie

Uber’s in a tight spot. Even before going public, the ride-hailing business has already been facing turbulent waters due to some particular reasons. Fortunately, it has ventured out of the restrictions of simply providing rides for people and included other business models like freight and new mobility — which entails bikes and scooters into its roster of services.

Today, UberEats, which is a new mobility service, earns the company more than its parent service or ridesharing. Specifically, Eats is on a steady pace of increasing its profits margin compared to Uber. Eats proves to be a revenue driver with gross bookings growth of 108% to $3.07 billion.

For the first quarter of 2019 alone, Eats generated $536 million in revenue for Uber — doubling the revenue generated from its 2018’s first quarter. Meanwhile, Uber’s ride-hailing revenue only went up 9 percent year-over-year.

From a broader perspective, Uber’s first-quarter earnings in 2019 reported a gross bookings growth of 230% for its other bets, while ride-hailing grew 22% compared to the same quarter last year.

Uber CEO Dara Khosrowshahi said on an investor conference call that gross bookings for new mobility “grew strong quarter over quarter.”

The news follows after Uber reported a loss of $1 billion in the same first quarter of 2019.

Primarily, Uber’s performance on the public market has been disappointing. Initially, the ride-hailing company was touted at $72 billion in the private market — which led experts to believe that Uber would reach an initial market cap of over $100 billion. Instead, the company currently sits at a $67 billion evaluation.

Three weeks after its IPO, Uber has traded below its initial IPO price on The New York Stock Exchange. In early May, Uber was priced at $45 per share, which raised $8.1 billion for the company. However, the ride-hailing company was priced at only $42 per share the following morning. At the time of writing, Uber’s at $40 per share.

“Earlier this month we took the important step of becoming a public company, and we are now focused on executing our strategy to become a one-stop shop for local transportation and commerce,” Khosrowshahi said in a statement. “In the first quarter, engagement across our platform was higher than ever, with an average of 17 million trips per day and an annualized gross bookings run-rate of $59 billion.”

According to The Verge, Uber is planning to bank on the success that Eats is having to improve its ride-hailing counterpart. Specifically, Khosrowshahi plans to make Eats customers also partake in its ride-hailing services.

Khosrowshahi pointed out that the company’s ride-hailing service is already a “very strong audience creator” for the Uber Eats business. But he also said that 50 percent of Eats customers don’t use Uber for ride-hailing; the food delivery service is bringing in new customers. “These are customers that then we can upsell into the rides business,” Khosrowshahi said.

Moreover, Uber is planning to involve itself more in emerging markets. In Latin America, for example, Khosrowshahi said Uber will be able to “uniquely capitalize on the synergies between the two offerings as we’re the only company [there] that offers both rides and Eats.”

From a different perspective, Uber plans on investing in its food delivery service to promote its ride-hailing service in a more clever move, especially with the trend on shared solutions.

Shared solutions, like Uber, is redefining shopping and eating experience, to name a few. Visor says that “this phenomenon grew from the popularity of “life on demand”—what you need when you need it (think Amazon, Netflix). Then, perhaps, it was accelerated by the need for instant gratification that is a hallmark of the millennial generation.”

Relatively, the conventional eat-out experience has restructured itself from a pleasant and relaxing experience to a day of facing heavy traffic and stress, especially in populated and busy cities globally. That is where Eats becomes a more convenient option who can bring food to your home, office, wherever.

Other than that, Uber’s other services may still prove worthy of placing the ride-hailing company to its former economic position. Under Khosrowshahi leadership, he has added shared scooters, bikes, public transportation schedules, and buying tickets to Uber’s app. That’s in addition to the dedicated self-driving and flying car divisions he inherited from his predecessor, Uber co-founder Travis Kalanick.

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