Consolidation is bound to happen in sectors where there is too much capital chasing too many companies, Uber CEO Dara Khosrowshahi told CNBC while commenting on the company’s sale of its food delivery business in Indiato local rival Zomato.
Khosrowshahi added that the deal allows the San Francisco-based headquartered firm to deploy capital in other large markets. But what does it mean for the ride-hailing platform’s larger growth orientation which was at the centre stage under its founder Travis Kalanick.
To which, Khosrowshahi , said, “The vision for growth is absolutely there but it is growth that makes sense. We have been sellers in some spots and buyers as well. The point is that consolidation has to happen. There has been too much capital chasing too many companies which makes sense when you are in an only-growth mode.That growth has to consolidate so that you have two or three players in the market instead of four-five players,” he said.
Read: Zomato-Uber Eats deal to up appetite of global investors
As for India, where Uber Eats has been trailing behind Swiggy and Zomato, he said on the sidelines of the World Economic Forum in Swiss ski resort of Davos. Zomato’s business and our rides business will have a commercial agreement and we are going to be strategic partners and grow through them, he added.
Zomato acquired Uber’s food delivery business in India in an all-stock transaction earlier this week, giving the US firm a 9.99% stake in the Indian company. Backed by Ant Financial, an affiliate of Alibaba, Zomato expects to gain access to markets in south India and get as much as 25% additional orders after acquiring Uber Eats India, Deepinder Goyal, founder and CEO of Zomato, told ET in an exclusive interview.
Uber entered the food delivery business in 2017, when the Swiggy and Zomato, had already tapped some of the larger cities. Since then, the company has relied heavily on discounting, and some exclusive tie-ups to acquire and retain users. But with an operating loss of Rs 2,197 crore between August and December 2019, the business has been lagging behind as the number three player in a highly cash intensive market.
Uber’s ride hailing business competes with homegrown firm Ola.
Also Read: Giving 10% stake for 20% more business is worth it: Deepinder Goyal
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