Place strategy

Uber’s delivery gains put it in Amazon’s sights

For Uber, its platform is the launchpad, the pivot point that helps the company expand its horizons beyond ridesharing.

And with its continued increase in deliveries — from restaurants and retailers — the company is up against Amazon in what you might call the last-mile battle.

Amazon, for its part, announced on Monday that it now offers same-day delivery in 10 US cities for Prime members. While Uber’s Chief Financial Officer, Nelson Chai, detailed on the company’s second-quarter earnings conference call on Tuesday (Aug. 2) that Uber had seen “a real increase on the delivery side…and the cost per transaction is only getting better,” the stage could be set for a last mile title match.

Chai added that “we’re doing a really good job as a team in terms of creating efficiency there. We are seeing gross margin improvement in both mobility and delivery. »

Uber’s earnings results show gross bookings up 33% year-on-year. Go a step further and the company revealed in its filings that the Delivery segment saw a 12% growth in gross bookings to $13.9 billion, which in turn generated a 43% gain in its revenues from this unit, at $2.7 billion, measured in constant value. currency. Uber Freight grew to $1.8 billion from $348 million last year, but it’s worth noting that the most recent results show the impact of the Transplace acquisition, which closed at the end of last year.

As demand for delivery and freight increases – where Uber members have about 2.7 times more gross bookings on Uber than non-members across a range of services – so does supply, mainly in the form of the drivers themselves.

Management noted on the call that new driver signups were up 76% year over year, and 70% of new drivers signing up on the platform were doing so to generate revenue to offset the effects of inflation.

Power of the platform

CEO Dara Khosrowshahi said on the call that “what we’re seeing with new vertical customers is that Uber Eats customers, who are also ordering from new verticals, tend to stay with us and tend to have a higher frequency. And that’s really part of the power of the platform… If you ride with us, if you eat with us, if you drink with us, if you order groceries with us, we become a daily part of your life.

The commentary and numbers continue to confirm Uber’s strategy to expand its platform into a super app, where consumers navigate all kinds of daily activities through a digital gateway.

Of course, by promising (and keeping that promise) to bring goods to consumers’ front doors — just about everything from groceries to electronics — Uber is fighting Amazon.

The battle against Amazon

And as we pointed out in Amazon’s recent report, delivery times are improving. Management’s own commentary on the conference call was qualitative, but we see evidence in recent announcements that same-day delivery is an important initiative for the e-commerce giant.

Also Read: Amazon Q2: Faster Delivery, Extended Prime Benefits, Fewer Discounts Than Competitors

Amazon said Monday (August 1) that it now offers same-day ordering and delivery for Prime members in more than 10 U.S. cities from retailers including PacSun, GNC, SuperDry and Diesel. This list will, of course, grow.

As we noted, Prime members in Atlanta, Chicago, Dallas, Las Vegas, Miami, Phoenix, Scottsdale, Seattle and Washington, D.C. are the first to sample the new same-day deal, free for Prime members. Americans spending $25 or more on qualifying items and $2.99 ​​for those spending less than $25.

Amazon, as we’ve pointed out, has 171 million Prime members in place, and they spend relatively more than what’s been seen with other subscriptions such as Walmart+.

The same-day delivery option marks an extension of Amazon’s own business models and sets up an ongoing and increasingly bitter battle between platforms, fought along the last mile.

Also read: Amazon and Walmart oppose same-day delivery



About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.