Zomato Buys In Indian Operations Of Uber Eats
Continuing its recent efforts to exit money-losing businesses, Uber in India agreed to sell Uber Eats to food delivery giant Zomato.
FREMONT, CA: Uber has successfully battled in dozens of countries to be the leader. But, in India, it had to finally surrender its food delivery business to the customer, who is loyal only to discounts. Uber, agreed on Tuesday to sell its food delivery business in India to a local competitor, Zomato, in exchange for 9.99 percent of the Indian start-up.
The sale of Uber Eats to Zomato for $300-$350 million, after over a year of looking for buyers and haggling overvaluation, underscores the challenge of building a sustainable food delivery business in India. The other thing is that Zomato and Swiggy have also not cracked it either. After burning more than $3 billion of venture capital in pursuit of market domination, food delivery firms in India have come to realize that delivering food to customers is not really profitable. It is really a very late realization.
All the necessary information about customers, including their phone numbers and order history, will be transferred to Zomato by Uber Eats. Also, for six months, Uber’s app will transfer Indian users to Zomato when they click on the “Get Food Delivery” button.
The market is already ruled by two delivery giants Zomato and Swiggy, and they control more than 70 percent of the food delivery market. Zomato said the deal would add Uber’s 10 million in monthly food orders to its own 40 million, giving it a slight edge over Swiggy.
Uber’s chief executive, Dara Khosrowshahi, says that India remains a significant market to Uber, and they will continue to invest in growing their local Rides business.
In 2008, Zomato came to the market as an online guide that used to scan menus from the restaurant. Later they added reservation and review features. Recently they added food delivery feature, which is now their core business. Ant Financial is an investor who added $150 million to Zomato’s coffers in a fund-raising round this month.