On the surface and inside

follow

April 14, 2024

0 comments

2876 browsing

8 Collections

21 minutes

  Two major challenges for B-end product managers: how to analyze and design products from multiple perspectives such as market, users, and business? How to effectively manage and promote project implementation?

Despite being defeated by Didi in the Chinese market, Uber's market value has skyrocketed to $160 billion, nearly ten times higher than Didi, thanks to the integration of ride hailing and food delivery services; Formed a global version of Meituan+Didi model.

Uber, who disappeared from China, has become envious by Didi.

The latest statistics show that Uber's market value has soared to $160 billion, six times higher than Didi, which is curled up in the powder market.

In the direct confrontation between the past two countries, Uber clearly lost more than won:

At that time, Uber, as the pioneer of ride hailing services, entered the Chinese market with $2 billion in dimensionality reduction, and ultimately ended up selling itself to Didi, giving it the title of "Uber Butcher".

While Didi was relentlessly pursuing and threatening to compete with Uber in the global market, Uber was plagued by scandals. Not to mention taking on the initiative, even its founder, Karanik, was fired off by investors.

When competing in the capital market, the contrast was even more pronounced, with Uber bursting at the opening and Didi rising 18.9% on the day of its listing.

The scene of a former defeated general turning the tide of the situation is inevitably regrettable. Some investors support Didi, believing that in terms of efficiency, Didi's ride hailing business is much higher than Uber's, and it is completely dragged down by its survival environment.

But in fact, Uber is no longer just a global version of Didi, but a global version of Meituan+Didi. It can be seen that its food delivery business is on par with the online ride hailing business in terms of volume.

It is obvious that the business scope of the two companies is no longer in the same competitive dimension.

01 "Beijing, Shanghai, and Guangzhou" in the United States turned out to be a "poor food delivery mine"

When Uber was driven out of China by Didi, the business of its North American headquarters was also in turmoil.

"Unless you can invent a flying bike, you don't have to worry about Uber's competition." At the Q1 2016 financial report, GrubHub, the American "food delivery leader," disdained the Uber Eats, which were born out of nowhere.

At that time, Uber had over 2 million potential takeout drivers, over 8 million potential takeout users (ride hailing users), and over a decade of accumulated urban road maps, which provided unique conditions for making takeout.

In theory, GrubHub should be on high alert, but the reality is unexpected.

What does a product manager need to do when there is no product available?

In the process of building a product from scratch, it is not easy to play the role of a product manager. Apart from the well-known roles of writing requirements, writing requirements, and writing requirements, there are many things to do. A product manager is not what you see as someone who only troubles you and makes demands

View details>

GrubHub's arrogance can be seen from the user's comments on Uber Eats: a New York user roast on Facebook that "it will be delivered in 15-26 minutes when ordering lunch, which made me wait for 50 minutes."

Are the workers present here getting angry by substituting such delivery efficiency? American workers, of course, will not buy it.

Uber never expected to face such a terrible situation.

Like most food delivery players, their first choice for entering the delivery market is large cities such as New York and Washington, where businesses and users are highly concentrated.

However, the level of congestion in these cities far exceeds expectations. Taking New York as an example, the average traffic jam time per driver in 2017 was as high as 100 hours.

Under such road conditions, driving for takeout is like opening a blind box, and the fundamental advantage established by Uber's ride hailing service has been shattered.

In contrast, GrubHub avoids this pitfall by not providing delivery services at all and mainly matchmaking transactions between users and merchants. This determines that even if the delivery time is not guaranteed, users cannot blame the platform.

And more importantly, thanks to its early entry, it has a first mover advantage with a large number of enterprise users in first tier cities - by directly connecting GrubHub software with the company's financial software, employees can not only place orders with just one click, but also directly claim reimbursement.

In this way, the user's resentment was completely dispelled: for the workers, they can have free meals and any mistakes can be forgiven.

It can be seen that even with Uber Eats pouring out overwhelming subsidies, they still cannot take away high-frequency users on GrubHub.

Uber Eats abandoned its original advantages and began to learn from its peers by adding two wheeled delivery services in areas such as New York and Washington.

But the problem is that the delivery miracle electric vehicle has been almost "banned" by the New York government due to safety hazards; Bicycles have nothing to do with speed.

Due to time constraints, Uber Eats did not operate in first tier markets such as New York until 2018, resulting in continuous losses.

On the contrary, the competitor GrubHub is "as stable as Mount Tai" in these regions. For example, the market share of New York in Q4 2018 reached 71%, and the gross margin of the platform once reached 52.26%.

However, this first mover dividend is both a form of luck and a shackle.

Outside of major cities, the income levels in second tier cities and suburbs in the United States are not weak. For example, in 2016, the average household income in second tier cities was 99% of that in first tier cities.

This means that users in these regions also have the ability to pay for takeout.

However, GrubHub kept a distance from these regions, and by 2017, nearly 70% of its business was concentrated in a few large cities.

Not eating the fat on the side of the mouth is not because GrubHub doesn't crave it, but because there is no happiness to enjoy it.

In second tier cities and suburbs, losing the foundation of corporate customers, they can only rely on timeliness to attract users to use takeout.

Compared to first tier cities, these areas have sparse population and business density, and unified delivery is the most effective way to improve timeliness, which means GrubHub can only start building its own logistics.

But for GrubHub, which has already been launched, it is not an easy task.

In 2015, GrubHub attempted to build its own outsourcing team and calculated the profitability under this model - the profit margin decreased from 76% to 31%.

In the eyes of investors, it's like saying "I'm going to burn your money and turn GrubHub into a less profitable model." Panic quickly spread, and GrubHub's stock price continued to plummet, forcing management to shelve the plan.

And GrubHub's expansion is being held down, leaving a competitive gap for other players.

It can be seen that when Uber Eats launched its independent app, the first cities to be launched did not have the presence of New York or Washington, but were replaced by second tier cities such as Seattle, Atlanta, and Houston.

Obviously, Uber Eats is attempting to take a path of "surrounding the city from the countryside".

02 No McDonald's, can't win the misplaced battle

In 2016, McDonald's Senior Vice President Lucy suddenly visited Uber Eats, and she immediately put a high hat on Uber Eats, saying "You are very suitable for our brand" and earnestly begged for cooperation.

Uber Eats was also excited and quickly finalized the cooperation, providing tailored services for McDonald's in just two months and three days before entering the trial operation phase.

And they also gave McDonald's "VVIP" treatment, such as always putting McDonald's restaurants at the top of the recommendation list and agreeing to give McDonald's more promotional support.

Uber Eats is so urgent because it is not easy to engage in a "misalignment war" outside of big cities.

In second tier cities, although Uber Eats has gained a basic order volume through its ride hailing business, it cannot help Uber, which has been losing money for seven consecutive years, block the mouths of investors.

In the suburbs of big cities, it is even more difficult to cultivate land, not to mention food delivery, and even ride hailing services are difficult to penetrate.

At that time, the American catering market was already mature, with a chain rate of nearly 55%, showing a "reverse chain" characteristic - the more suburban and small cities, the more chain stores there were.

This means that the food delivery markets in suburban and second tier cities have become more prosperous, and Uber Eats cannot miss out on these two market cakes if they want to make a comeback.

The McDonald's that was delivered to the door at this time was exactly what Uber Eats wanted.

McDonald's completed the nationwide store layout early on, with a total of 13000 stores; Moreover, in the minds of 96% of elementary school students in the United States, McDonald's Grandpa's popularity is second only to Santa Claus, and the "Maimen" community has a wide base.

Note: Due to minor changes since 2017, the situation in 2024 will be used instead.

Moreover, at that time, McDonald's also had a demand for Uber Eats, even though the delivery commission was as high as 15% -30%, and it even stood on the Uber Eats platform at the performance meeting.

In those years, Burger King's stores rapidly expanded, and Chick fil-A was selected as the most popular fast food restaurant among Americans in 2016, while McDonald's itself lost 5 million foot traffic and store sales declined significantly.

The anxious McDonald's conducted a customer survey and only then realized that they had lost on "not being fast enough".

Taking Chick fil-A as an example, its self-made ordering app allows diners to order in advance, dine directly at the restaurant, or take it away.

This hit the pain point that diners hate queuing in the store the most, and once launched, it has continuously topped the free download list of the App Store in the United States.

McDonald's also tried to launch its own app, but the internal process was too long, and it took five years for the self-developed product to be launched.

This was obviously too late, and at a loss, the information about the Chinese market caught the attention of the headquarters - among the performance reports from various regions, China was the only region that did not decline, and 20% of its revenue contribution came from takeout.

This opens up McDonald's thinking: 75% of its global customers live within three miles of the restaurant, just within the best delivery distance for takeout.

And Uber's delivery capacity and global layout coincided with McDonald's global takeout demand, thus opening a cooperation that was both fulfilling and fulfilling.

But things didn't go as smoothly as imagined. Taking the first test of the two companies in Florida as an example, Uber Eats orders immediately increased by 20% -30%, but the scale was insufficient and almost all were losses.

Fortunately, many new users have been attracted in, and repeat purchases by users are also commendable. Uber's goal of expanding into new markets is gradually being realized.

As can be seen, Uber Eats quickly expanded its reach and, on its own, elevated suburban areas such as Livonia to the fastest growing list of takeout in the United States.

Taking advantage of the high performance, Uber accelerated its listing and thanked McDonald's with a full 2 pages in its prospectus.

Just as the market was expecting Uber to help alleviate the pressure of losses in the ride hailing business with McDonald's help, and even dreaming of turning losses into profits, McDonald's franchisees stopped doing so.

The extremely high delivery commission has kept them working for Uber Eats. In order to maintain profits, they formed the National Owners Association and forced McDonald's to cut ties with Uber.

Helpless, McDonald's had to end its exclusive cooperation with Uber Eats in the United States and the United Kingdom, and began collaborating with other food delivery companies such as DoorDash and JustEat.

This has taken a cold breath from the market. It should be noted that Uber Eats is already burning money for growth. Data shows that even in Q4 2019, the delivery business still contributed less than 25% to Uber's overall order volume, resulting in losses exceeding 75%.

And McDonald's is one of the largest sources of orders for Uber Eats, with sources close to Uber Eats in the UK claiming that McDonald's once contributed 60% of its scale.

Now that McDonald's is about to leave, the days of Uber Eats making money are even more distant.

Uber is aware of this, but from the company's perspective, the long-term value of the food delivery business may be more important.

03 Epidemic catalyzes "Meituan+Didi"

"We created a second Uber internally within three years."

In Q2 2020, amidst the global ride hailing race track's bleak outlook due to the pandemic, Uber executives confidently stated at a performance meeting that the company had found the "second curve" of growth.

At that time, Uber's takeaway business officially surpassed its ride hailing business and to some extent offset its decline, making Uber's performance more resilient compared to peers such as Lyft.

Even, food delivery has started to feed back travel, and Uber's future performance will also mention that more than 20% of first-time users using travel services are food delivery consumers in the United States and over 40% in the United Kingdom.

It can be said that without the support of delivery business, Uber's winter may come even more intense.

In the early stages of the epidemic, due to concerns about infection, a large number of ride hailing drivers lost their jobs. During this period, they usually rely on relief subsidies provided by the state government to make a living.

And this amount of money ($600- $1000 per week) is higher than the income of some drivers (around $700 per week), so many drivers are not willing to take the risk of returning when the epidemic eases and various regions try to relax travel.

Unmanned travel platforms have to spend money to attract drivers back to work.

Lyft stated that drivers will receive a reward of $800 upon returning to the platform; Uber has also launched a $250 million "stimulus plan" to ensure that drivers (excluding tips) earn a median hourly income of over $35.

But this has also caused investor dissatisfaction, and at the current performance meeting, various management teams were caught by analysts questioning profit losses.

In this situation, compared to Lyft, which only has the transportation sector, Uber's advantage of "walking on two legs" is highlighted - playing the takeout card.

As can be seen, Uber first integrates food delivery and transportation in the app, guiding drivers to maneuver and switch between the two; Subsequently, a cross scheduling algorithm is used to deliver travel orders to drivers during peak commuting hours and food delivery orders during peak dining hours.

In this way, drivers can smoothly connect between carrying passengers and delivering takeout, reducing empty distance and increasing income. As shown in the figure below, Uber drivers earn higher income than other single travel or food delivery platforms.

Having multiple responsibilities inevitably requires more labor. The data shows that the working hours of part-time drivers are 1.1 times that of drivers who only drive ride hailing services and 1.7 times that of drivers who only deliver food.

Busy and busy, drivers naturally don't have the extra energy to go to other platforms to take orders, and Uber is able to firmly grasp the drivers.

As the number of drivers continued to increase, Uber began to switch to the "hunting" mode, constantly raising the take rate.

Of course, drivers with union support are not easy to bully. Ride hailing drivers across the United States have risen up in protest against Uber and Lyft's exploitation, demanding higher wages.

The pressure is once again coming.

Uber, who is unwilling to receive further subsidies, has once again chosen to use takeout to help themselves out: a new Uber One membership model has been launched, reducing membership fees from $24.99 per month to $9.99, aligning with other platforms.

From the user's perspective, it is difficult to resist the temptation of spending $9.9 to have both daily needs of car hailing and meal delivery benefits.

Reflected in the data, Uber membership increased from 12 million to 19 million in 2022-2023.

With more members, the order volume naturally increases. Taking food delivery as an example, Uber members not only drive the order volume, but also contribute half of the food delivery order volume.

Moreover, Uber has already dug various gold consumption caves and is preparing to harvest users.

Starting from Q2 2020, Uber will rename takeout (Eats) as delivery and incorporate it into local delivery services for grocery stores and supermarkets, and launch Uber Connect similar to Meituan Express.

Data shows that from Q4 2020 to Q4 2023, the number of users who switched from catering to ordering retail increased from 8% to 14%. These cross category consumers contributed more orders to Uber.

And the transaction data generated during this period can also be used to optimize precise recommendation algorithms and increase purchase amounts.

With the increase in both frequency and amount of consumption, the income of drivers has skyrocketed, so there will naturally be no further strikes, and the platform can also make money to overcome the crisis.

It can be seen that Uber's "Meituan+Didi" model has gradually become clear and powerful under the catalysis of the epidemic.

04 Summary

In 2018, Didi also expanded its food delivery business, but its planned investment of 10 billion yuan went viral after burning 1 billion yuan.

At that time, many people attributed Didi's superficial taste to the dominance of Meituan and Ele.me, and Didi's fierce charge did not bring much noise.

But upon closer examination, one may find that competition may only be superficial.

In Didi's eyes, "If internationalization fails, we will also become a diversified domestic company in China, but this is a strategic failure."

It is this business philosophy of "treating internationalization as the only success" that determines the fate of Didi's food delivery expansion.

From this perspective, Didi may also find it difficult to become a Uber.

Authors: He Jinyi, Hei Yinke, Zhang Ranran, Editors: Fu Xiaoling, Cao Binling; Data support: Insight Data Research Institute

Source official account: Insights Data Research Institute (ID: excel ers).

This article is authorized for publication by everyone as a product manager in collaboration with the media @ Table. Reproduction without permission is prohibited.

The picture is from Pixabay and is based on the CC0 protocol.

The viewpoint of this article only represents the author himself, and everyone is a product manager. The platform only provides information storage space services.

Uber活成了滴滴羡慕的样子