Is the consolidation of Zomato and Uber Eats beneficial to the food delivery space?

The year 2020 has started with an interesting note for the food industry. By this time, many of you have come to know about the acquisition of Uber Eats by Zomato.
Without further ado let’s dig deeper through why’s and how’s and how it impacts the food industry.

Big win for Zomato?

After months of rumours, it was on Tuesday that the Zomato’s CEO Deepinder Goyal sprung a surprise.
The tweet saying “Uber Eats is now Zomato” has grabbed immense attention and heated up the food delivery space. The deal was for around Rs 2,485 crores. The official blog post also states that with Uber Eats, Zomato will currently, all in all, have a share of 55% of the food delivery market. The deal gives Uber 9.99% of proprietorship in Zomato.

It is a distressing fact that UberEats had failed to make a raise in the food delivery market dominated by Swiggy and Zomato. While Swiggy is slightly ahead of the field, this consolidation is new hope for both the food delivery players to capture higher spaces in the food-tech sector.

How does the deal impact the food delivery industry?

No doubt that the competition between food delivery players will get fierce as the market grows. The Uber Eats deal has put Zomato ahead. The country-wide combined order volume of Zomato and Uber Eats will be 46-47 million, while for Swiggy it will be 42-45 million. According to the market research feature, Zomato will reach $17 million by 2023 with 16% annual growth.

With Zomato’s takeover on Uber Eats, over half of the shares in the food delivery market has been acquired. The delivery network of Uber Eats will profit Zomato in developing its market share and henceforth helps to intensify the competition with Swiggy.

The growing food delivery marketplace

However, India’s food delivery market has a bright future. Asia has become the largest international market for online food ordering mobile apps. Having a revenue of $ 45 billion in revenue in 2018, it is expected to be $100 billion by 2025 as per Frost and Sullivan report.

The prediction shows the food delivery industry is expected to touch $15.23 billion by 2023.

According to analysts, in addition to wider internet penetration, the growth of per capita income is also a driving force behind the growth in demand for online food delivery. The increasing flow of funds with rising per capita income has led to the rise of virtual kitchens. The report says the virtual kitchen market has the potential to reach $1.05 billion by 2023.

The bottom line

The industry is getting unpredictable with the food delivery giants. Time would say whether the food delivery industry would continue to make more disruptions shortly!
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