Heated competition and increased incentives in the Indian market weighed heavily on Uber Eats’ take rate in the first quarter of this year, the company revealed last week.
The take rate is the percentage of each dollar a company keeps as transaction-based revenue from the gross food sales on its platform.
For Uber Eats globally, take rates as expressed by the percentage of adjusted revenue to gross bookings fell from 12.42 per cent in Q1 FY2018 to 7.78 per cent in Q1 FY2019.
During the company’s earnings call, Uber CFO Nelson Chai said that increased incentives to consumers, drivers and restaurants in India were behind nearly half of the year-over-year decline in Uber Eats’ take rate during the quarter.
The company has been making significant investments in incentives and promotions to help drive growth in India, a country in which local competitors, particularly Ola, Swiggy, and Zomato, are well capitalised and have local operating expertise.
Swiggy had in December 2018 raised $1 billion in funding, in addition to two other rounds last year, and has since expanded to general deliveries. Uber’s other food delivery rival in India is Zomato, which is backed by Chinese tech giant Alibaba.
“[I]t’s growing very, very quickly. There are two competitors that are very aggressive. We are doing well on holding our own but it is a market where we are funding both the eater, the courier, as well as the restaurant in terms of building the business,” Chai told analysts.
Uber CEO Dara Khosrowshahi added that the company expects the take rate for the Uber Eats business to increase over the rest of the year.
Excluding driver incentives, Uber Eats reported $536 million in Q1 FY2019 revenue, an 89 per cent jump from the same quarter last year and a 23 uptick from the fourth quarter of 2018.
In February, the Economic Times had reported that Uber Eats had held talks with rival Swiggy to sell its India business. Intense competition has also forced ride-hailing giant Ola, which acquired Foodpanda’s local unit in 2017, to pivot the business to focus on in-house brands, TechCrunch reported last month.