{"id":290,"date":"2016-12-21T14:10:32","date_gmt":"2016-12-21T14:10:32","guid":{"rendered":"http:\/\/reformingretail.com\/?p=290"},"modified":"2019-01-23T07:42:20","modified_gmt":"2019-01-23T13:42:20","slug":"quick-update-on-ubereats-after-leaked-financials","status":"publish","type":"post","link":"https:\/\/reformingretail.com\/index.php\/2016\/12\/21\/quick-update-on-ubereats-after-leaked-financials\/","title":{"rendered":"Quick Update on UberEats after Leaked Financials"},"content":{"rendered":"<p>Over the past few months&nbsp;some insiders have been leaking <a href=\"https:\/\/www.theinformation.com\/ubers-loss-decelerates-reflecting-china-exit\">financial information about Uber<\/a>. Enough information was finally gleaned that conclusions have been drawn. I&#8217;m going to copy-paste information from a summary I read:<\/p>\n<ul>\n<li>Uber\u2019s third quarter net revenue totaled $1.7 billion.<\/li>\n<li>That figure is up 240 percent from the year-ago period.<\/li>\n<li>Uber lost $800 million in the third quarter, before various GAAP expenses.<\/li>\n<li>The firm\u2019s gross revenue grew 8 percent to $5.4 billion in the third quarter, impacted by the company\u2019s \u201cChina exit.\u201d<\/li>\n<li>Uber\u2019s home market losses are \u201cmore\u201d than the prior $100 million rate reported for its second quarter.<\/li>\n<li><strong>UberEats could do $100 million in net revenue next year. It will lose more than $100 million in the same period.<\/strong><\/li>\n<li>The supercorn&nbsp;has \u201cmore than $7 billion still sitting in the bank, plus another $2 billion from a credit line.\u201d<\/li>\n<\/ul>\n<p>Notice that gem about UberEats?<\/p>\n<p>I&#8217;m still working through what that means. Uber already&nbsp;wears&nbsp;the crown as&nbsp;the industry&#8217;s most expensive online ordering provider per the table below. That&#8217;s in addition to separate delivery fees for consumers, mind you.<\/p>\n<table style=\"height: 399px;\" width=\"587\">\n<tbody>\n<tr>\n<td style=\"text-align: center;\" width=\"108\"><strong>Provider<\/strong><\/td>\n<td style=\"text-align: center;\" width=\"123\"><strong>Fee<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Amazon Prime Now<\/td>\n<td style=\"font-weight: 400;\">27.50%<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">ChowNow<\/td>\n<td style=\"font-weight: 400;\">$499 + $99\/mo<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Eat24<\/td>\n<td style=\"font-weight: 400;\">12.50%<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Food Fetch<\/td>\n<td style=\"font-weight: 400;\">$150 + $60\/mo<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Grubhub<\/td>\n<td style=\"font-weight: 400;\">13.50%<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Orders2.me<\/td>\n<td style=\"font-weight: 400;\">$79-119\/mo<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">UberEats<\/td>\n<td style=\"font-weight: 400;\">30%<\/td>\n<\/tr>\n<tr>\n<td style=\"font-weight: 400;\">Zuppler<\/td>\n<td style=\"font-weight: 400;\">$89\/mo or 9%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>It could be that Uber is pursuing very aggressive growth. But it would be more troubling if that wasn&#8217;t the case.<\/p>\n<p>Uber operates&nbsp;the world&#8217;s largest on-demand transportation service. In theory, this would give them the greatest economies of scale, allowing them to offer the lowest transportation prices in the space.<\/p>\n[bctt tweet=&#8221;Unless the average order is&nbsp;$50, we can&#8217;t see how UberEats does anything but lose money. &#8221; username=&#8221;&#8221;]\n<p>Here&#8217;s that math again <a href=\"http:\/\/reformingretail.com\/index.php\/2016\/10\/19\/99-of-last-mile-delivery-services-will-fail-so-be-careful\/\">from an earlier post<\/a>:<\/p>\n<p>Go to <a href=\"http:\/\/www.taxifarefinder.com\/?lang=en\" target=\"_blank\" rel=\"noopener\">TaxiFareFinder<\/a> to estimate how much it would cost to have a taxi deliver food to you. I took a screenshot of the estimated fare for some pizza to be delivered to a Houston resident 3.5 miles from the pizza shop.<\/p>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-2393\" src=\"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=770%2C380\" alt=\"\" width=\"770\" height=\"380\" srcset=\"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?w=800&amp;ssl=1 800w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=300%2C148&amp;ssl=1 300w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=768%2C379&amp;ssl=1 768w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=370%2C183&amp;ssl=1 370w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=270%2C133&amp;ssl=1 270w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?resize=740%2C365&amp;ssl=1 740w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\" \/><\/p>\n<p>Now we have to think about margin. The best report I\u2019ve ever seen was a five-<a href=\"http:\/\/www.taxi-library.org\/sf-controller-report-2006.pdf\" target=\"_blank\" rel=\"noopener\">year compilation of taxi costs<\/a>&nbsp;published by the city of San Francisco in 2005. For those taxi operating companies that were profitable, the average margin was 20%; 36% of the operators were unprofitable. If an average transport service charged $15 for delivery, it really wouldn\u2019t be making that much.<\/p>\n<p>Using the fare calculator above, if I want my $15 pizza delivered, delivery just doubled the price! Since I\u2019ve been conditioned to pay true cost for these kinds of items, for $30 I\u2019m making an entirely different purchase decision. Just forget about sub-$15 purchases:&nbsp;the notion that I\u2019ll spend $5 on a hamburger and shell&nbsp;out THREE TIMES the meal\u2019s intrinsic value to have it delivered is ludicrous.<\/p>\n<blockquote><p>At an average order price of $50, UberEats&#8217; 30% fee comes to $15, or the average <strong>real cost of delivery<\/strong> assuming the distance is something around 3.5 miles per the taxi example above.<\/p><\/blockquote>\n<p>If the distance is further than 3.5 miles &#8211; which is undoubtedly the case for ~50% of orders &#8211; or if the average check is smaller &#8211; which is likely&nbsp;the case for ~95% of orders &#8211; UberEats loses it&#8217;s lunch.<\/p>\n<p>If merchants do this math they might realize that delivery is a pricey proposition and a trend not yet worth following. Let Uber &#8211; who has a balance sheet of $7B &#8211; figure out the economics for online ordering. If they can&#8217;t make the math work, the rest of them won&#8217;t either.<\/p>\n<p><script async=\"\" src=\"https:\/\/widget.websitevoice.com\/UMwLESBjj1uq-UOHwOeBBw\"><\/script><br \/>\n<script>\n  window.wvData=window.wvData||{};function wvtag(a,b){wvData[a]=b;}\n  wvtag('id', 'UMwLESBjj1uq-UOHwOeBBw');\n  wvtag('widget-style', {\n    backgroundColor: '#F5953E',\n    contrast: 'wv-contrast-dark'\n  });\n<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Over the past few months&nbsp;some insiders have been leaking financial information about Uber. Enough information was finally gleaned that conclusions have been drawn. I&#8217;m going to copy-paste information from a summary I read: Uber\u2019s third quarter net revenue totaled $1.7 billion. That figure is up 240 percent from the year-ago period. Uber lost $800 million [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":true,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[5,4],"tags":[],"class_list":["post-290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-solutions","category-merchants"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p81nA2-4G","jetpack_featured_media_url":"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2016\/10\/a1.png?fit=800%2C395&ssl=1","_links":{"self":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/comments?post=290"}],"version-history":[{"count":4,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/290\/revisions"}],"predecessor-version":[{"id":4079,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/290\/revisions\/4079"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/media\/2393"}],"wp:attachment":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/media?parent=290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/categories?post=290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/tags?post=290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}