UberEats Business Model

Published On:Monday 22-Jul-2019

How Does UberEats Make Money? UberEats Business Model In A Nutshell—–9 Point

This article is about how does UberEats functions and ubereats business moddel? Let’s share a story of a renowned platform of UberEat to popup the secret of UberEats’ success in the shortest possible period. As a layman, we think that Uber Eats has been minting money through day & night food deliveries, but the fact is on the other way round. Why? Because Ubereats is not only one, but it is three in 1. Therefore,we can conclude that UberEats business model is of tripartite market place comprising of the following:

  1. Driver
  2. Restaurant Owner
  3. Customers

Three of the parties are considered the main characters of Uber Eats Platform such as; UberEats( itself) gets commission from Restaurants on the orders, Customers pay the small delivery charges, and sometimes cancellation fee( if any) while the Drivers earn their livelihood through deliveries.

UberEats has a sound background as it is the world’s largest ride-share company that has been in operation since 2014 and today the Uber Eats is just 5 years’ old, but looks like a university girl. UberEats has been getting more popularity in most of the countries of the world due to fast & rush deliveries of food.

So, let us read & learn through this post as to why Uber is investing a lot on the UberEats business model including its value proposition, operational components and also vision of the Uber Eats. Our main topic is “how does Uber Eats make money? Uber Business Model Business In Nutshell”

1. A Tripartite Marketplace Business

As discussed earlier, UberEats business model is a three-sided marketplace comprising of a driver, a restaurant owner and a customer. Therefore, whatever the profit is earned during a particular period, it is divided into 3 parties in the agreed ratios.

2. A six-point value proposition:

  • Blazing fast delivery: Uber Eats ensures food delivery within 30 minutes in its operational surroundings which is unbelievable. Hungry! Just order & get it, but through UBER EATS
  • No minimum order concept: No need to order a large amount & variety of food, Uber may discharge its obligation even in case of minimum requirement.
  • Existing customer base: The basic reason of success is that there are already a number of customers of Uber .
  • Better utilization of Uber’s resources: The Ubereats business model is using its full infrastructure such as cars, drivers, and roads, besides managing it effectively.
  • A top class algorithm: The algorithm developed by Uber is the best tool in online food delivery system. i.e., order management, order allocation and order dispatch.
  • The global presence: Due to its excellent services in the field, Uber Eats has been overriding globally. This is due to its best performance and following the business ethics.

3. How Does ‘UberEats’ Makes Money? The UberEats Business Model

Following manner will describe how Uber eats makes money:

  • Standard Delivery Fee OR Convenience Fee: A flat delivery fee is charged from the customers regardless of the order value which may range from $1 to $5.
  • Recurring Revenue Share from Restaurant Partners: Uber Eats takes a cut of 15% to 40% on each order duly fulfilled from the Restaurant partners. Uber Eats, however, decides the distribution ratio of the commission on the age and maturity of the market basis.
  • Marketing & Advertising Fee from Restaurant Partners: Ubereats business model is a propeller for restaurant partners and fetches more customers by virtue of its mobility.

4. It is also important to know that how much UberEats pays for their delivery partners or drivers.

Well! It is divided into three segments which are pickup fee, delivery fee and per mile fee also referred to as mileage fee. However, it may vary from one region to the other.

A customer can tip the delivery partners if they want to and 100% of this tip would be allocated to the delivery partner only.

5. UberEats’ Cost-Saving Factors:

UberEats businness modell has been proved a cost effective & more efficient than that of its competitors regardless of its unique three-sided marketplace business model

6. Lesser Customer Acquisition Cost (CAC) and Shared Marketing Expenses: All of the marketing and advertising expense incurred by Uber Eats is comparatively less since it’s getting most of its users through cross-promotion on the Uber App.

7. Shared Network of Drivers & Riders: Shared network makes fast, easy & free from any trouble

8. Savings on Logistics Costs: Due to the route policy, savings in the running costs of Uber Eats have been noticed. It is called the pool system in which the delivery shall be entrusted to that Driver who will be on the route to save unnecessary cost of the logistics.

Approximately, this is how the unit economics should reflect as shown in the table below:

Amount paid by You Amount Received by the concerned Restaurant Delivery Charges Net revenue for Uber Eats
$50+5= $55 $50- 30% commission on order= $ 35 Pickup fee + Delivery fee+ charges/ mile= $4+$2+($2×3)=$12 =( $55-35)-$12= $8

9. The Vision of Uber Eats

Uber has been covering 50% of the US population at present and likely to cover 70% or more by the end of 2019. Uber Eats holds 27.9% of the revenue share of all top online food delivery services in the USA and is approximately valued at 20 billion USD. Uber Eats has been the most modern ecommerce in the world and it has been striving hard to cater to the needs of food to the millions of people in different parts of the World including USA, UK, India and Australia despite the fact that online food ordering & delivery platforms have a great menace of competition. So, think about it, how the Uber Eats may have made a place in the Ecommerce world.

Multirestaurant System provides business owners and entrepreneurs with software and apps like ubereats which is named as Ubereats Clone. Do check it Out if you plan to start food delivery business similar to ubereats.

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