The battle for a bigger share in South India's online food-ordering space just got spicier.
With Zomato acquiring UberEats
, the Gurgaon-headquartered company will finally have a decent presence down south, a market dominated by Bengaluru-based Swiggy
on 21 January announced it had acquired UberEats
in an all-stock deal, where Uber gets 9.99 percent stake in the Indian startup.
"(The deal) was not about market expansion... It was about market consolidation," said a Zomato
executive on the condition of anonymity. "The deal makes us the clear leader in the food delivery space."
The deal, which the Economic Times
says is worth $350 million
, values Zomato
at $3.5 billion.
have a presence in 550 cities, but their markets are different.Zomato
is strong in the north, which accounts for almost 70 percent of the 36 million orders it gets in a month, company sources said. It is the other way round for Swiggy
, with the south contributing to about 70 percent of the 42-45 million orders it services in a month.
Sixty-five percent of UberEats'
10 million orders came from the south. Put UberEats
together and the count for southern India can go up to about 14-15 million orders a month. According to a second source, UberEats
had 30 percent of the market share in the south, second only to Swiggy
, which dominated the market with 55-60 percent share. Zomato
was a distant third.
The competition in Indian online food delivery space is only going to get fierce as the market grows. The market will be worth $12.53 billion by 2023, according to DataLabs by Inc42. UberEats
will add muscle to Zomato's
Lunch and dinner counted for the bulk of Zomato
orders but UberEats
was strong in the breakfast and snacks segments, said the Zomato
executive. And, South India loves its breakfast, especially when it is ordered online.
"The deal creates a duopoly in the market and the competition will be between Zomato
, especially now, with Zomato
making inroads into the South," said Sanchit Vir Gogia, chief analyst and founder of Greyhound Research.
Without considering customer overlap, the UberEats
deal clearly puts Zomato
ahead. The country-wide combined order volume of Zomato
will be 46-47 million, while for Swiggy
it will be 42-45 million.
When talks to sell UberEats
was in the running. "But they were asking for an unrealistic price, so we decided to expand on our own," said a Swiggy
executive on condition of anonymity.Swiggy
scaled up to expand its presence in South India, the reason why it was eyeing UberEats
. "That advantage is lost now," the Swiggy
executive said. "The deal will also not affect our market-share position. There are overlapping users for UberEats
It remains to be seen who will lead the lucrative but fiercely competitive food delivery space, but Satish Meena, a senior analyst with Forrester Research, said Swiggy
would continue to be the leader despite Zomato
Original Source: https://www.firstpost.com/news & analysis/with-ubereats-in-the-bag-zomato-breaches-swiggys-stronghold-on-food-delivery-business-in-south-india-7935611.html