Details of the deal between Uber and Postmates
Uber announced the purchase of Postmates, a service that delivers food. The amount of the deal is to be $2.65 billion. The acquisition is extremely beneficial for Uber, as it will strengthen the company’s position in the U.S. food delivery market and create competition to the leader of the segment – DoorDash.
After the completion of the deal Postmates will take over the management of Uber Eats and its head – Pierre-Dimitri Gore-Coty. It is not yet known whether the current director of Postmates will be given a place in the management of the company.
Although this food delivery service is not a direct competitor to the market leader DoorDash, it still holds strong positions in Los Angeles and the southwest of the country. Therefore, the merger of assets with Postmates will be a great opportunity for Uber Eats to expand its user base.
This service is not the first one that the corporation has considered for purchase. Before it became known of the intention to purchase Postmates, Uber planned to take over Just Eat Takeaway.com, but the parties could not agree and the deal did not take place.
The cost of Postmates in the IPO a few years ago was estimated at 1.8 billion dollars, but during this time the service has been significantly improved. Its chip is the cooperation and brand promotion through the influencers, including such celebrities as Kylie Jenner, Post Malone and Kara Delevingne.
Thanks to the feedback from the stars and idols of young people, this service was able to stay in the market with high competition and successfully do business.
Postmates appeared in San Francisco, but thanks to tweets from the model and presenter Chrissy Tigen and actress Sophia Bush, the delivery service quickly became popular in Los Angeles. Originally, investors invested about $700 million in the startup, and annual revenue last year was over $400 million.
However, the competition in the U.S. food delivery market is quite serious, and investors are not in a hurry to invest serious money in Postmates, as there are stronger market players mentioned DoorDash and Uber Eats, as well as Grubhub, which is the leader in New York.
Last year Postmates had a 12% share in the segment, but this was achieved by a large number of advertising and discount programs. Therefore, it does not seem real to count on large growth as it is quite difficult to maintain positions.
In 2010, the service was founded by three entrepreneurs who were initially engaged in courier services. Gradually, the startup switched to cooperation with restaurants.
In 2014, the service entered the Los Angeles market, which became the sixth city where the company worked. Initially, Postmates focused on rich customers, and the service fee was dollars. Now the audience of customers has been expanded and the tariff has been reduced to 99 cents.