When UberEats – the delivery arm of the ridehailing giant – was launched in 2014; the market was already crowded with online food ordering and delivery platforms. In most urban centers, one could get delivery from restaurants via different apps already. So how should we examine Uber’s launch into this space ? Is food delivery the real endgame, or are we merely witnessing the proverbial “sustaining innovation” curve leading to UberEverything.
Uber’s competitive advantage:
While customers associate Uber with ridehailing, its main value proposition lies in logistics. Then the question becomes : if anyone could get a car under a few minutes to get from point A to point B, what else could be transported ? The UberEats app is hence a first attempt at testing the previous question putting the driver, the food and the customer at the right spot at the right time, in a way that has seldom been done before. Uber appears to hit all of the critical factors for food delivery regardless of location:
- A large user base (demand-side): perhaps the most valuable asset of all, millions of people are active Uber users ready to be converted or “cross-sold”. As described by McKinsey in a 2016 report, delivery platforms are sticky with 80% of consumers rarely leaving 
- Massive and relatively-cheap-to-acquire supply: not only does Uber already have cars on the road, hence not needing to build capacity from scratch, moving into UberEats will actually help increase utilization across its different businesses (ridehailing + food). Consequently, the same driver that had just dropped you at your house, might handle a food delivery right afterwards
- A world-class dispatch algorithm: having created the market for ridehailing in the first place, Uber enjoys an unmatcheable headstart in how to organize efficiently and quickly amongst available cars, listed restaurants and famished users
- A global presence: while Uber does face many local competitors in the food delivery business, there are no real global ones
After the company announced the creation of its “UberEverything” division , UberEats seemed to be but a first variation of the core human transportation service. There is little doubt that Uber will venture into an array of other sectors where it will continue to leverage its main competitive advantages. What’s more, the emergence of autonomous vehicles could offer Uber almost endless new possibilities. Perhaps even too many…
As the company keeps pursuing this frenetic growth, and locking-in hundreds of millions of customers worldwide, it is still to this day struggling to turn a profit, and it is therefore not out of the woods yet.
Uber will not become UberEverything until a best-practice profit-making model is identified. But how long would it take to get the model standardized and optimized? Perhaps the irony of platforms stickiness is that users get addicted to cheap or subsidized services, leaving the company that chose this strategy with the onus to “make do”.