[futureastronaut]

> (2) It's arguably the most valuable battleground in logistics - developing a "last mile" delivery network at scale.

How is Uber Eats any different from the many other operations strapping boxes to the backs of bicyclists? I don't see anything innovative about Uber's last mile logistics compared to Amazon (who aren't even that great) for instance.

It sounds more like an excuse Uber's leadership would make as they desperately search for profitable business.

[Marazan]

There is no "last mile delivery network at scale".

Well there is, its called the postal system but there sure as heck isn't any just-in-time last mile network "at scale". You just have fuck tonnes of delivery drivers who need to get paid. There is no magic "at scale" wand to wave over it to make it economically viable.

The excuses for Uber losing money is getting jaw dropping now.

[threeseed]

Uber Eats like Uber ride sharing are marketplace businesses.

In order for a new entrant to come in they need to grow both businesses and consumers at the same time. Which is hard with no competitors. But very hard with cash rich companies like Uber trying to stop you.

We saw this all play out in Australia where we initially had Foodora and Deliveroo. Then Uber joined with aggressive marketing and pricing. They pushed Foodora out and the number of businesses in Deliveroo is dropping. It is going to be a winner take all situation. At which point prices will rise and the profits will roll in.

[healsjnr1]

I've found that this isn't the experience. Most options I'm after are available in multiple apps.

More to the point, all drivers seem to use multiple apps. I often get my food in bags from the wrong company. The barrier to switching for drivers _and_ the customers is zero.

As a result this feels less like money spent on a unique strategy and more like money spent buying the business.

[hug]

It's worth pointing out that in my area of Melbourne the number of places available on any of the platforms is rising, but the platform that is increasing the quickest in my area is Menulog.

Uber Eats just changed their delivery price to be based on distance, which has vastly increased the average delivery fee, and the prices on Uber Eats are inflated over every other delivery platform because of the cut they take.

And in Melbourne CBD, by far the largest number of bikes I see are delivering for Easi.

Not sure that the market is actually struggling here.

[threeseed]

Melbourne CBD is a bit of an anomaly as you have a super high concentration of Asian students in one area. Hence the growth of Easi.

But everywhere else Uber is still by far the leader. Foodora couldn't compete. Deliveroo is struggling and Menulog isn't really competitive given lack of marketing spend.

[jondumbau]

Uber eats doesn't even operate in outer suburbs, Menulog/eatnow does

[bryanlarsen]

Restaurants aren't limited to a single service, though. This isn't a winner take all situation. We will end up with an oligopoly but the barriers will be low enough to prevent the winners from being too greedy or complacent.

[acdha]

I’m not sure I agree with your conclusion because the cost of switching is almost zero, and none of the parties involved have an incentive for loyalty. Here in DC, the restaurants heavily promote whoever is giving them the best rate and the drivers all work for multiple vendors, to the point that I’ve had orders from one accompanied by a suggestion to switch to a competitor. If anyone starts raising prices business can shift overnight, and there’s a ceiling over which people stop buying or fallback to the non-app delivery guy.

[goatinaboat]

At which point prices will rise and the profits will roll in

That was Moviepass’s theory too, it didn’t work out so well in practice. Once the price went up people simply stopped using it.

[lostmsu]

I don't understand why providing subsidized services like this to grow market share is not made illegal. It seems clearly anticompetitive.

[icebraining]

I think they claim the prices are not unsustainable once they get economies of scale. Every new company "subsidizes" their customers until they reach a critical mass that allows them to achieve profitability.

[gchamonlive]

Isn't it possible that the sole reason that this market niche exist is because of competitive prices?

Maybe Uber is killing the market it is trying to monopolize and by the time it gets it all, the pricing it will have to practice to actually make it profitable will drive customers back to eating in person in the restaurant

[BigJono]

Menulog seems to be getting creamed here too. At this point I'd say it's UberEats' race to lose.

[bredren]

Did you end up trying all three? Was the experience essentially the same?

[aresant]

1 - “desperately search for profitable business” - UBERs core business is a breath away from profitability. And trending quickly in the right direction. Looking at their corporate overhead and new market bets it’s clear they could cut their way to profitability today. But they are chasing a larger prize.

2 - Logistics is mind bogglingly difficult and capital intensive. Uber’s built in driver base has idle time that is an outrageously deep moat in competing in this space. Uber has 3 million drivers, say each vehicle costs $10k avg that is $30b In free capital equipment that they are starting with. Their internal traffic / route data that they collect from all 3m drivers all the time is the richest in the world. FedEx - for example - has “only” 85,000 vehicles.

[goatinaboat]

driver base has idle time that is an outrageously deep moat in competing in this space

It isn’t a moat at all! Every driver has all the apps and picks jobs from any of them. If I use Lyft instead of Uber the chances are I'll get the same driver in the same car anyway. And he’ll follow his in-car GPS to find me and then to take me to my destination so there’s no value in the route data either.

[wmf]

In theory there may be economies of scale in food delivery if a single driver can deliver multiple orders from the same restaurant. Uber Eats already offers free/cheap delivery when there's already an order out to a given restaurant.

[abvdasker]

It's not theoretical. Uber Eats already does single-origin, multiple-destination batching to squeeze efficiency out of their network (I have a friend who works there). Afaik there are other kinds of batching they have not yet implemented.

[kunaalarya]

They can be successful at it at scale because they already have a massive supply of drivers that they can allocate to rides or picking up food.

Amazon’s food delivery failed and closed last month. Caviar was sold to Doordash. Postmates is struggling.

[reilly3000]

I see three fundamental issues:

1. Many of their restaurants are simply not geared well for being in the delivery business. They don’t have good parking for drivers. Their menu is built around dining in, not 30 mins in a car. Their delivery packaging is subpar or overkill. They really have to train their restaurant partners to succeed or they won’t get repeat business. They have an inventory problem.

2. The value proposition of food delivery really only exists in the largest cities. Not everyone wants to eat out, but in smaller towns it’s easy to access and social. For somebody who spends 3 hours commuting each day, cooking and dining out lack appeal, but that isn’t a problem for the majority of Americans.

3. There simply isn’t much margin in the restaurant business. Most are happy to run on 1-3% margin. Food cost, scheduling labor around varying demand, and overhead with tremendous fixed and surprise costs. A spike in fuel prices can spell for a losing year, simply based on food cost and reduced demand.

I think a new model of kitchen is in order. An on-demand food service would be able to provide very fresh and hot food in short order, without soggy packaging. It could run by a network of sort of Forward Operating Bases that are positioned around predicted demand, and may move based on data. They may take walk up orders but are tooled around providing delicious food to delivery vehicles. I can imagine a lot of frictionless ways to get food into cars, scooters, or even autonomous delivery wagons, if you knew in advance that is the business you are in. They can take preorders and run their inventories based on that data to avoid food waste. There are no tables to bus, plates to break and wash, or floors to maintain. With good planning the kitchens can be cheap to build, own, and run. And the food can be the very best, made by people in the neighborhood for the neighborhood.

Until all that is common, ya I don’t think the thing works without subsidies. If we did then food delivery would have been much more common; it’s never been a technological problem.

Case in point of delivery optimized to the hilt: Dominos Pizza. It actually all comes down to the menu.

[claytoneast]

See Dark Kitchens: https://disruptionhub.com/rise-of-the-dark-kitchen/

[ghaff]

And that assumes that a restaurant business that's geared to delivery and pickup exclusively/primarily is possible. Which AFAIK is mostly limited to pizza and Chinese in most places--where delivery is mostly a solved problem.

[sid-kap]

Uber's main (only?) advantage here is their ability to take advantage of a shared labor pool. By increasing the demand for driving + food delivery, it makes the Uber labor pool bigger and further increases the lock-in effect so Uber drivers don't want to open other apps.

[x0x0]

A guess: it increases usage. Uber has to maintain a two-sided network, and this eg gives their drivers something to do during mid-day lulls.