On Monday, the New York Times reported that Uber sold its Indian-centered Eats business to Zomato. The corporation will receive 9.99 percent in the Indian food delivery company as payment. As part of the deal, the San Francisco corporate will hand over the customer and order data its local Eats segment collected.
In addition, Uber will redirect Indian customers seeking food delivery through its app to Zomato for the next six months.
Why Uber Sold Its Indian Eats Business
Despite its ubiquity, Uber has continually struggled to make a profit. Indeed, the brand recorded net losses of $1.16 billion in Q3 2019. As such, the firm is looking to cut costs wherever possible. Notably, the Indian segment of Uber Eats had been a significant money loser for the multinational service company.
The New York Times notes Uber Eats in India only represented three percent of the firm’s global food delivery business for the first three months of 2019. Conversely, the segment also accounted for 25 percent of the division’s adjusted operating losses in the same frame. As such, the ride-hailing service’s move makes a lot of sense.
In November, Uber CEO Dara Khosrowshahi explained his strategy involved divesting the company of struggling segments. The executive said his firm would pull out of any market where it isn’t the first or second biggest food delivery service. Nevertheless, the corporation will continue to offer ride-hailing service in the Southeast Asian nation.
For Zomato, the acquisition of Uber Eats in India represents an opportunity to expand its domestic footprint. Once the sale goes through, the food delivery service will increase its monthly active user base from 40 million to 50 million.
Uber’s Recent Reorganization Steps
In the last few months, Uber has taken steps designed to make its operations profitable.
Last September, the corporation discontinued its South Korean food delivery service after failing to gain traction in the local market. That same month, the firm reduced its headcount by eight percent, laying off 435 workers. Simultaneously, Uber has also expended serious capital in hopes of diversifying and broadening its offerings.
Last October, Uber relaunched its financial services segment and began offering limited helicopter ride service in Manhattan. Besides, the company also purchased a grocery delivery startup called Cornershop last fall. Two months later, the corporation received government approval to acquire Egyptian ridesharing service Careem for $3.1 billion.
Notably, Uber has also made strategic investments in technologies that will power its business in the coming decade. The firm entered into a partnership with Joby Aviation to develop an air taxi fleet that is scheduled for deployment in 2023. The firm also debuted a flying taxi prototype it created with Hyundai at the 2020 Consumer Electronics Show.
Uber entered into negotiations with a self-driving car startup called Foresight AI. In early 2019, the company secured $1 billion in funding specifically to develop its autonomous operation technology. Given the innovative nature of Foresight’s tech – it creates entire virtual worlds to test its vehicles – it would be a meaningful addition to the corporation’s portfolio.
Currently, ride-hailing and food delivery services generate billions of dollars in revenue annually. Moreover, Uber has played a key role in transitioning both concepts from fringe ideas to mainstream industries. Now, the firm just needs to find a way to make its services financially viable to become a true technology institution.