Uber launched the food delivery app UberEats in Amsterdam one day prior to the IPO of rival Takeaway.com. “Uber has been delivering people around cities for years, we are a key part of the infrastructure and we know how cities move,” said Jambu Palaniappan, general manager for UberEats in Europe, the Middle East and Africa. With UberEats people can order food from restaurants which do not have their own delivery service. Uber’s deliverers go back and forth between restaurants and customers by bicycle, car or scooter following the instructions of an app.
It is – after the arrival of the British Deliveroo and German Foodora to major cities in the Netherlands – a new concern for Take-away.com, the parent company of Thuisbezorgd.nl. The company issued an IPO on September 30, just when international competition is entering a new phase between food deliverers. The regional start-ups are trying to stay ahead of wealthy US companies, such as Uber and Amazon.
Size is crucial
Takeaway.com hopes to raise about 161 million euros with the IPO. In comparison: Uber managed to raise about 13 billion euros in the last couple of years. Also the pockets of Deliveroo and Foodora are much deeper than those of the Dutch company. However Thuisbezorgd.nl claims to still have about 90 percent of the Dutch market. According to the prospectus, the company has grown rapidly in Germany and Poland as well. The reason for the fierce competition in the food delivery market is that the companies believe that the winner-takes-all. This means that the eventual winner could monopolize the entire market.
Market penetration
General manager Jambu Palanappian for UberEats in Europe also thinks that the food delivery market works this way. According to him, it is all about global economies of scale in order to keep costs down and to maintain a technological edge. UberEats is moving into the Amsterdam delivery market by giving big discounts. For example, it does not charge for delivery and there is no minimal order amount. Also Foodora and Deliveroo have recently engaged in similar activities. It is the question whether Takeaway.com can keep up to this fight with its limited resources. It is going to be very interesting to see who will be the winner who takes all, if there is any.
References
https://www.ft.com/content/9761e788-84ca-11e6-8897-2359a58ac7a5
https://www.nrc.nl/nieuws/2016/09/27/uber-stort-zich-ook-op-maaltijdbezorging-4480414-a1523662?
Hi William, really cool post! I wasn’t aware that Uber was moving into the food delivery business actually, but they certainly seem intent on challenging Thuisbezorgd in the Netherlands. My prediction is that if they get their marketing strategy right then Uber have a good chance of making large inroads into Thuisbezorgd’s current monopoly on the food delivery market. However, I think this will have a large part to do with the initial discounts offered that you mentioned, and I’m wondering how quickly they will be able to capture a significant portion of this market before Thuisbezorgd responds by offering more competitive prices and discounts themselves, that is if they can afford to which will be interesting to see!
My question to you is could you see the food delivery industry in the Netherlands moving towards a duopoly or even an oligopoly in the long run? Or do you think this will be a straight out fight between Uber, Thuisbezorgd, and the other challengers you mentioned such as Deliveroo, with the victor (re)gaining full control over this currently winner-takes-all market?
Hi Nick. Good question. I think there’ll eventually be an oligopoly with companies like Uber, Amazon, Thuisbezorgd, Deliveroo and Foodora trying to differentiate themselves. Probably they’ll try tapping into different niches, there are so many things food deliverers can specialize in. But I think Amazon and Uber will be the greatest, just because of their amount of resources.