Can the travel company tell the story of local life?

Editor’s note: This article is from the WeChat public account “Geek Park” (ID: geekpark), author Zhao Zi Xiao.

Uber and Didi, the two “big ships” of China and the United States that set out from the same business, are heading in different directions.

Uber’s Q2 quarterly financial report shows that the revenue of the food delivery business has been higher than that of the online car-hailing business, and it has become a real “cash cow”; on the other hand, Didi announced that its core business (on-line car-hailing) has become profitable, or that it has a small profit. , The order of Qixi Festival reached 50 million orders on that day, and it is currently trying new businesses based on travel.

At first glance, Uber seems to be moving closer to Meituan Food Delivery, relying on local life services to complete the evolution from a travel company to a behavior-based horizontal expansion. Will Didi, also an online ride-hailing giant, keep up with Uber?

Online car-hailing giants love takeaway

Takeaway has become Uber’s brightest business right now.

According to Uber’s second quarter 2020 financial report released in mid-August, Uber’s revenue was US$2.241 billion, a 29% decrease from US$3.166 billion in the same period last year.

Uber’s main revenue comes from three sources: travel, food delivery, and freight. In this quarter, Uber’s shared travel business revenue was US$790 million, a 67% decrease from US$2.376 billion in the same period last year; revenue from the food delivery business was US$1.211 billion, an increase of 103% compared to US$595 million in the same period last year. Excluding the impact of exchange rate changes, a year-on-year increase of 110%.

In Uber’s largest market, North America is still at a time when the epidemic cannot be ignored. People try to avoid travel. Therefore, Uber’s travel business has not yet returned to normal. Accordingly, the home isolation process has greatly stimulated the demand for food delivery, resulting in cost In the quarter, Uber’s “sideline business” surpassed its main business and became the highest revenue in one fell swoop.

Although this result has a certain chance, itUnable to draw a definitive conclusion that Uber is already a food delivery company. However, from the perspective of Uber’s development path, when the online car-hailing travel market is sluggish and the commercialization of autonomous driving still has a certain distance, the growth of the food delivery business has indeed boosted Uber’s performance to a certain extent. In the words of Uber CEO Dara Khosrowshahi: “Three years ago, our UberEats business had just started, and now it has surpassed the ride-hailing business. It took us three years to create the first Two Uber.”

UberEats is Uber’s food delivery business. After its official launch in 2016, it has been in a stage of rapid growth, and it was also Uber’s second largest source of revenue before this quarter.

Comparison of quarterly revenue between Uber’s travel and food delivery business|Geek Park Mapping

Uber has made no secret of its desire for foreign sales. Especially when Uber and Lyft classify drivers as independent contractors instead of company employees, and they have a strong conflict with the California courts, and may even be forced to withdraw from one of the most important markets in the United States.

In July of this year, Uber acquired Postmates, a food delivery company, for $2.65 billion. The American food delivery market has formed DoorDash, UberEats, Grubhub and Postmates four companies occupying 99% of the market share, of which DoorDash occupies 45%.

It is worth mentioning that UberEats has thought about the other two companies. UberEats was rumored to have acquired Grubhub for $7.3 billion, but due to price issues and suspected monopoly, it finally fell apart. In early 2020, Uber and DoorDash also discussed the possibility of a merger, and the agreement was ultimately not reached.

Some foreign media pointed out that the merger of UberEats and Postmates will become the largest food delivery application in the market.

Can travel companies make money by doing food delivery?

In the rapid growth of the food delivery business, UberWhile we are “closer” to Meituan takeaway, what many people may not imagine is that UberEats is not a profitable business.

Taking Uber’s 2020 second quarter financial report as an example, Uber’s adjusted EBITDA (net profit before interest, tax, depreciation and amortization) of Uber’s travel business was US$50 million, which was US$506 million in the same period last year. The U.S. dollar is down 90%; the adjusted EBITDA of the food delivery business was 232 million U.S. dollars, compared to 286 million U.S. dollars in the same period last year.

In other words, although the revenue of the online car-hailing business has dropped by nearly 70%, it is still profitable. Although the revenue of food delivery has doubled compared with the same period last year, it is in a state of huge loss.

Why does this happen?

Uber’s official explanation is: “The cumulative payment to the delivery driver has exceeded the cumulative delivery fee paid by the consumer.” In other words, the driver’s subsidy is increasing, including additional incentives for the driver , Necessary protective measures for drivers in response to the epidemic. This is not only a problem for Uber, but several other food delivery companies are also gaining market share in losses.

However, the profit model of online car-hailing has been figured out a few years ago: when the capacity reaches a critical point, the platform will make large-scale profits. The takeaway business essentially has this meaning. Khosrowshahi mentioned one point in the conference call after the financial report: takeaway is gradually changing from a “luxury” to an ordinary business. It can be seen that the epidemic has made a difference in cultivating user habits. Less contribution also laid a good foundation for scale.

It can also be seen from the year-on-year decrease in Uber Eats’s loss that at least Uber has hopes of profitability in this business. In the second quarter of 2020, the order volume of UberEats doubled compared with the same period last year, but the loss narrowed year-on-year, and the loss will not be more under the larger order volume, indicating that UberEats’ profit margin has improved.

Another key indicator is its commission rate (Take Rate). That is, the ratio Uber obtains from the total order amount (Gross Bookings) generated, covering Uber’s transaction commissions, marketing expenses, etc. The commission rate measures the ability of the Internet platform to convert GMV into Net Revenue. Uber Eats’ commission rate in the second quarter was 12.7%, an increase from the previous quarter. Excluding driver incentive subsidies, Uber Eats’ commission rate is 18.8%. For comparison, Meituan’s commission rate in the second quarter of 2020 was 11.7%.

Uber attributed the increase in the commission rate of the food delivery business to the increase in market size, including the increase in the number of cooperative restaurants and users, and the rationalization of incentive spending. In other words, Ub