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Weekly Review: A new challenger for Deliveroo/UberEats?

Ben Weiss, Friday, 22 May 2020

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Fresh competition for Uber Eats/Deliveroo

Just Eat was the original online takeaway service that revolutionised how we order food. Previously, we’d have to search every scrap of paper in our house hoping it was a menu from one of our locals that had a phone number, or go directly to the restaurant’s website if it had online ordering capabilities. Then Just Eat came along and gave us a whole directory of local menus where food could be ordered at the simple click of a button.

The likes of Deliveroo and UberEats then took the baton and evolved the industry further, integrating more advanced technological insights into the ordering process. And the next step of the industry’s evolution might be on the way courtesy of a familiar name. But could this fresh, new contender challenge the industry’s heavyweights?

Amazon has officially entered the game. Jeff Bezos’ company began to trial its new food delivery service in India, Bengaluru. UberEats itself entered the market in India looking to capitalise on a 50% market share of the rideshare industry in the country. It failed and ultimately pulled out last year, with the already established Zomato and Swiggy monopolistic share of the market too difficult to breach.

So, why would Amazon fare any differently? Simple answer: money.

Uber has been under immense pressure since going public to turn a profit, with many sceptics claiming the business model is flawed. The rideshare giant withdrew from the delivery industry in India citing it is looking to focus on its prospering taxi services in the region. Amazon, on the other hand, despite having had profitability issues for years, is in a financially superior predicament. It’s the second largest firm by market capitalisation and has one of the most recognisable brands in the world. It can throw money into this project and by sheer persistence force its way into acquiring market share.

Zomato and Swiggy have also suffered recently, as online orders have been cut by a third at the hands of the pandemic, causing a significant loss of staff. Now seems like the perfect time to exploit the cracks that are appearing.

Time will tell whether Amazon will be more successful in this area than UberEats. If it is, we could very well see the US giant mount a serious challenge to the delivery industry in the UK and beyond. One to watch for the future.

 

US jobless claims near 40 million

For the seventh week running, US jobless claims have fallen, but the tally since the pandemic began to severely impact the country stands at 38.4 million. Measures looking to reopen the economy had started to be put in place, but with unemployment at a staggering 15%, it seems they are yet to have an impact. Many have lost jobs temporarily, but it’s feared these redundancies could be permanent as firms look to recoup losses. Jobless claims should continue to bear significance in the coming week until they return to pre-pandemic numbers.

 

Rolls Royce job cuts

Sticking with the topic of jobs, UK manufacturer Rolls Royce has struck a huge blow as it announced it’s axing 9,000 jobs. The firm is most known for its production of high-end cars, but it’s its close ties with the suffering aviation industry that has led to this action.

Rolls Royce is a large manufacturer of plane engines, so the global downturn in travel has impacted the company more than most would first expect. Most of these job cuts are expected to occur at its HQ in Derby. Its price fell nearly 8% this morning on the news, and with a highly uncertain outlook for the aviation sector for the rest of 2020, whether or not it resumes to somewhat normality could continue to impact the UK-firm’s price. One expert even predicted it may be five years until Rolls Royce fully recovers.

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Highstreet shopping still more popular than online (but it’s getting closer)

We hear a lot about the surge in online shopping that’s come recently as a result of the virus, and yet, the proportion of shopping that’s done online compared to on the highstreet is still just 30%. That’s surprising, given that almost all clothing retailers have closed their shops, but the purchasing of goods such as groceries from supermarkets is undoubtedly bolstering highstreet figures.

Overall, the amount of goods sold in the UK in April fell by 18% (a new record) in comparison to the previous month. Retail sales figures are seen as a key indicator for economic performance. These weak figures were expected, but still read for a grim outlook.

And finally, some good news to end on

Enough of the doom and gloom. Major UK chain Wetherspoons has revealed plans to reopen 875 of its pubs once lockdown is restricted, which could be as soon as 4 July. I can almost taste that first post-lockdown pint already. 

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