Uber Technologies (NYSE:UBER) has sold its UberEats business in India to local rival Zomato. UberEats provides an online food delivery service. In exchange, Uber gets a 10% stake in Zomato—a leading Indian restaurant discovery and food delivery provider.
The Uber-Zomato deal mirrors the 2017 transaction between eBay (NASDAQ:EBAY) and Flipkart. eBay sold its Indian e-commerce operation to Flipkart in exchange for a small stake in Flipkart. However, eBay changed its mind and decided to sell its Flipkart stake in 2018. eBay took advantage of Walmart’s (NYSE:WMT) $16 billion investment in Flipkart to cash out of the business. Notably, eBay backed Flipkart alongside Microsoft and Tencent before Walmart countered Amazon (NASDAQ:AMZN) in India.
Uber teams up with Zomato in India’s online food delivery market
Uber hopes that venture with Zomato will help it benefit from India’s booming food delivery market. India’s online food delivery market is on track to grow to over $5.0 billion by 2023.
The Uber-Zomato deal comes as Amazon struggles to conclude its investment for a stake in British food delivery service Deliveroo. In May 2019, Amazon had a $575 million investment in Deliveroo. Amazon made the investment after it shut down its own food delivery service in Britain. The British antitrust regulator quickly raised concerns about the Amazon-Deliveroo deal and opened an investigation. Last month, the regulator escalated its review of the deal, which threatens to delay the closing of the Amazon-Deliveroo transaction.
UberEats is one of Deliveroo’s competitors in Britain and other markets.
UberEats is one of the top food services in the US
The online food delivery market in the US was worth $8.5 billion in 2017. The market is on course to hit $15.5 billion by 2022. UberEats is one of the leading food delivery services in the US with a 20% market share. DoorDash is first with a 37% market share. Notably, DoorDash strengthened its position in the market by purchasing Square’s food delivery brand Caviar. GrubHub is second with a 30% market share, while UberEats is third. Last year, Amazon shut down its US online food delivery service Amazon Restaurants.
The deal with Zomato comes at a time when Uber stock has been on a tear this year. Uber stock has gained more than 18% YTD (year-to-date). GrubHub stock has risen 15% for the year, while Amazon stock has gained less than 1.0%.