The growing ‘app’etite for UberEats

Introduction

The company UberEats has grown to capitalise and transform the food delivery and takeaway industry. UberEats is a food delivery platform, that has been developed from its partnering platform Uber. It operates a three-sided business model within the sharing economy to transform social change within its industry.

“Internet-based platforms facilitate drastic reductions in the transaction costs between users and providers. This creates whole new markets, which were previously only possible to a very limited extent” (Hansen et al, 2016).

UberEats has utilized the rise of the digitally enabled ‘sharing economy’ through platform technology, to instill transformative change in political, economic, social and cultural spheres within the landscape. These changes have altered the way producers are able to connect with their consumers for a greater exchange of goods and services.

Its purpose and development

 Platform owners Garret Camp and Travis Kalanick founded the company Uber in 2009 in California. Uber consists of a smartphone app that gives people access to a car ride service. After great success with Uber, the founders in 2014 launched UberEats (UberEats, 2020). UberEats was first launched in California named as UberFresh. Throughout several stages of development, the platform became more advanced and was later rebranded to UberEats in 2015 (UberEats, 2020).

The idea behind UberEats was to connect customers with a range of restaurants and local eatery places, place an order through an app, and have it delivered to their door without having to leave their home. During the developments, UberEats relaunched with its own individual food delivery app, separate to Uber. Both Uber and UberEats were drawing such great attention and demand that the company could better capitalise on running two apps, as both services needed their own base.

The screenshot above provides an example of what the UberEats home screen looks like. It shows how the options are displayed to optimise customer appeal and what information is given to the customers.

The introduction of UberEats filled a gap in the takeaway food market which “increased the supply and demand of food from the city’s most popular restaurants by eliminating the barriers to consumption. (Nguyen, 2017). Customers no longer have to be physically seated at a restaurant to experience in dining food and drinks. The start-up UberEats enables customers to “get the food [they] want, from the restaurants [they] love, delivered at Uber speed” (Nguyen, 2017).

The UberEats app gives its users the opportunity to look through and compare hundreds of restaurant and food options (Uber, 2020). Author Carson depicts how the transition has had effects both socially and culturally by sharing that “most people using the Uber app tended to use it transactionally: open it, hail a car, close it, and wait for the ride. Food was much more emotional, and people were willing to spend time scrolling through photos and menus to decide what they wanted” (Carson, 2019). Not only, did this alter the way people could use their smartphones, but it also gave them greater connection to the capabilities of it as there was now an emotional attachment.

Furthermore, UberEats continued to alter social and cultural expectations through their development of expanding their partnerships with hundreds of eat and drink options. Along with greater partnerships, the expansion of their service to be 24/7 on demand, meant that food could be delivered any time of day, and workers could work longer hours, which economically suits both drivers and the company.

The Business Model

How it works and how UberEats utilizes this model to their advantage

The business model structure that UberEats operates under is a three-sided model. Their model consists of the provider, the customer and the driver, which are all mediated through the UberEats platform app. This model has been adopted to effectively operate within the sharing economy; and with skill it has also been able to mobilise cultural change within the takeaway food industry.

The below image is a diagram of how this model operates

Copyrighted image © GI Digital Ventures SRLS – VAT 15455471001

Authors Munoz and Cohen (2018) explore how in recent years, “the sharing economy has emerged as a disruptive approach to traditional business-to-consumer business models, creating opportunities for start-ups and challenging incumbents to rethink their approach to value creation and formulas to deliver such value” (Cohen et al, 2018).

Munoz and Cohen further expand by depicting the same business models used with similar companies will have vastly different impacts interdependent on the place in which it operates (Cohen et al, 2018). The way UberEats has crafted their business model has interdependently had successful reach for their company and its users.

The below video provides insight and greater detail about the sharing economy and its relevance towards companies such as UberEats.

https://www.youtube.com/watch?v=yy7MH9TyZck

UberEats uses their business model to maximise on market demand towards their targeted audience. In an economic sense, the “UberEats business model involves short-term, peer-to-peer or business-to-business transactions that share use of the service, as well as facilitate the form of partnership collaboration (Bishop, 2019).

The model works to provide UberEats and its stakeholders with revenue through a chain; the chain as stated by Austin follows, firstly “restaurants pay commissions on the orders to UberEats; Customers pay the small delivery charges, and at times, a cancellation fee; Drivers earn through making reliable deliveries on time and efficiently” (Austin, 2020).

The following diagram represents the business model as well as the revenue breakdown.

UberEats business model and revenue breakdown

The role of UberEats is to be the mediator between all channels, it does this role successfully by facilitating all the restaurants, making sure to include a range of pricing, cuisines and location options. For consumers their demands, appetites and wants can be fulfilled at an efficient rate; and finally, for the drivers, UberEats allows them to work as little or as much as they wish, inclusive of their chosen availability.

Although this business model works successfully to provide revenue to all three sides, question arise about how even the advantages weigh out amongst each side of the model. From a political and economic point of view, the providers such as the restaurants and the employees often get an uneven balance of return for their services.

Authors Veen, Barratt and Goods (2020) highlight that through this business model, even though “workers enjoy relative mobility and flexibility; they have little control over how many deliveries they receive, even in a developed market economy such as Australia with socially protected employment; platforms are able to carve out pockets of market despotism” (Veen et al, 2020). The disparity between positive and negative outcomes for each component of this business model can be reasoned as a result of the sharing economy; and how it caters towards ‘gig’ economy work.

The gig economy is a free-market system and working within this economy means there is a rise in contracted ‘gig’ work, and the decrease in ‘traditional’ job roles (Larsson et al, 2020, p.5). For the advantages for restaurant providers is also questioned, an article expands this point, by outlining how “operators understand that listing on digital channels translates to more orders, more distribution, and what feels like “free” marketing. But the restaurant world is notorious for its slim margins, and operators are left writing off most of this potential uptick in profitability to high fees from the UberEats channel itself” (Solving the digital dilemma, 2018).

For more knowledge on the gig economy to see how UberEats fits into this landscape is done through the below video

https://www.youtube.com/watch?v=oQfTJy0sRVs

The phenomenon of the gig economy clearly plays out on the UberEats platform under the company’s business model, with its few entry barriers (Veen et al, 2020). In terms of company gain and their success, “the use of UberEats ensures workers activate their labour power and comply with the work rules” (Veen et al, 2020) to ultimately produce profit.

Furthering on how this business model has allowed UberEats to become such a power player, is also accredited to their partnerships with restaurants. The platform collaborates with highly regarded restaurants and celebrities to further capitalise the market and earn revenue. These collaborations are done through online advertising, promotions and campaigns. A recent campaign, released in Australia has attracted Australian viewers from online platforms such as Facebook advertisements, Television advertisements and the radio.

This campaign is known for the iconic slogan of “Tonight I’ll be eating….” (UberEats, 2020). These adverts feature Australian celebrities, voicing what they will be eating from the app. The campaign not only caters to the best local restaurants in each city, it also influences Australians to be active in their engagement with the app. The creative marketing used to source new business, and the use of approaches that become inclusive for their audience; changes the way they are able to relate socially and culturally.

The following video is a preview of an advertisement from this campaign.

https://www.youtube.com/watch?v=ZAIwDshsHvs

Successful companies such as UberEats, have influenced the shift of business models towards demand for suitability with online platforms. Whilst simultaneously changing the way food delivery is perceived for all three sides of their business model, the transition and power behind the model has instilled change for users to better relate and use these platforms socially and culturally.

The ecology

 An internet ecology as outlined by Looi, is comprised of “a technological system, where multiple parties are inter-connected and or dependant on particular technologies, thus effecting the way the service is overall conducted” (Looi, 2008). With a rise in popularity for online platforms as well as the advances in technology, there has been a shift in how these business ecosystems can work successfully and interdependently (Smart et al, 2017).

Below is a diagram outlining the UberEats’ internet ecology.

UberEats internet ecology map

The UberEats ecosystem is made up of owners, partners, customers, competitors, service providers and regulators. Having this degree of separation within a company to its internal and external stakeholders is innovative and allows each section of the ecosystem to coexist interdependently and constantly have an evolving relationship.

Researcher Nip furthers this by outlining that the “close connection between the categories within an ecosystem, mean that each entity flexibility effects the survival of the company, as well as create strong barriers against competitors” (Nip, 2002).

For UberEats their impressive market share, results in being tough competitors for their direct competition with such as other food delivery platforms or restaurants that provide the ‘in dining’ experience.

The way the UberEats ecology is defined, allows for constant access to a vast amount of digital information, which is able to become increasingly more integrated into societies cognitive routines (Smart et al, 2017).

UberEats Innovation

As addressed in the analysis of UberEats’ development their ability to transform the food delivery industry with their innovation has been significant. The process of disruptive innovation summarizes this significance as they have replaced previously established competitors in this field.

The partnerships and loyalty from the customers of Uber, UberEats’ partnering app, has allowed UberEats to further establish themselves within the market. The pre-established reputability they had when entering, allowed for vital partnerships and relations with key restaurants to be made. These partnerships add to the individuality and uniqueness of UberEats, as well as assert industry dominance against competitors.

Through the growth and development of the platform, the process between ordering food, picking up and receiving has become so efficiently done, making food more easily accessible. Suiting the demand from customers wanting to order food that is reliable and quick becomes an effortless way to have meals. This highlights that the business model UberEats has in place, is suitable towards the introduction of the sharing economy; thereby relating to their consumers more so than food delivery has done before.

A major success of this company was their entry point. Capitalizing on the gap in the market and using online platforms, meant they could adapt their platform for ideal use and revenue. The idea to introduce food delivery into the sharing economy was innovative, yet also contributed to the development in how delivery operations would be handled in the future.

The increase in sales for restaurants, and the employment of hundreds of individuals continues to make the app effective within their business model, which in turn, supports the internet ecosystem of UberEats.

To finalize

The introduction of UberEats, as a platform which utilizes the environment of the sharing economy has meant that it has been able to create transformative change within its landscape. The three-sided business model the company has in place, is a factor that continues to shift cultural and social expectations of food delivery by providing benefits to each sector. In turn, the connection between the business model and the companies relevant internal and external stakeholders allows their internet ecology to be continuously shape the political, economic, social and cultural spheres of the landscape.

Bibliographies

Austin, L. (2020).  How Does Uber Eats Make Money? Uber Eats Business Model in a Nutshell. FourweekMBA. Retrieved from, https://fourweekmba.com/uber-eats-business-model/.

Bishop, R. (2019). The “Sharing Economy” and the Uber Evolution in Australia. E-Journal of Social & Behavioural Research in Business, 10(3), 34–40. Retrieved from, https://search.proquest.com/openview/d1c93bb8bdd55fa960851cf3d8646aa1/1.pdf?pq-origsite=gscholar&cbl=1456362.

Brown, K. (2014). Naming and addressing, shared global services and operations, and open standards development. Internet Ecosystem. Retrieved from, https://www.internetsociety.org/wp-content/uploads/2017/09/ISOC-Internet-Ecosystem.pdf. [hyperlinked article]

Carson, B. (2019). Ubers Secret Gold Mine: How Uber Eats Is Turning into A Billion-Dollar Business to Rival Grubhub. Forbes. Retrieved from, https://www.forbes.com/sites/bizcarson/2019/02/06/ubers-secret-gold-mine-how-uber-eats-is-turning-into-a-billion-dollar-business-to-rival-grubhub/?sh=2658280c1fa9.

Hansen, H., Windekildem I. (2016) Transaction costs and the Sharing Economy 18,1-15. Doi: https://doi.org/10.1108/info-09-2015-0044.

Larsson, A., Teigland, R. (2020). The digital transformation of labour: automation, the gig economy and welfare. Routledge. Retrieved from, https://www-taylorfrancis-com.ezproxy1.library.usyd.edu.au/books/e/9780429317866/chapters/10.4324/9780429317866-1.

Looi, C.K. (2008), Enhancing learning ecology on the Internet. Journal of Computer Assisted Learning, (17), 13–20. doi: http://doi.org/10.1111/j.1365-2729.2001.00155.x.

Munoz, P., Cohen, B. (2018). A Compass for Navigating Sharing Economy Business Models. California Management Review, 61(1), 114-147. https://doi.org/10.1177/0008125618795490.

Murphy, P. (2020) Special group Australia takes Uber Eats Tonight I’ll Be Eating to the US and Canada. AdNews. Retrieved from, https://www.adnews.com.au/news/special-group-australia-takes-uber-eats-tonight-i-ll-be-eating-to-the-us-and-canada. [hyperlinked article]

Nguyen, J. (2017). Why UberEats is Succeeding in Australia. Forbes. Retrieved from, https://www.forbes.com/sites/nguyenjames/2017/03/16/why-ubereats-is-changing-australias-food-scene/?sh=151db3e55103.

Nip, J. (2002). Technology and contingent conditions in community formation on the Internet. Media Ecology Association. New York City. Retrieved from, https://ses.library.usyd.edu.au/handle/2123/23020.

Smart, P., Heersmirk, R., & Clowes, R. (2017). The Cognitive Ecology of The Internet. Springer international publishing. Berlin. doi: 10.1007/978-3-319-49115-8_13. Retrieved from, https://core.ac.uk/download/pdf/131207088.pdf.

Solving the digital dilemma: It’s a give and take for restaurants. (2018). Nation’s Restaurant News. http://search.proquest.com/docview/2055525698/.

UberEats (2020). How Uber Eats works. UberEats. Retrieved from, https://about.ubereats.com/au/en/?_ga=2.228710366.33350464.1605848163-855778429.1605407007

UberEats. (2020). About us. UberEats. Retrieved from, https://www.ubereats.com/au.

Veen, A., Barratt, T., & Goods, C. (2020). Platform-Capital’s ‘App-etite’ for Control: A Labour Process Analysis of Food-Delivery Work in Australia. Work, Employment and Society, 34(3), 388–406https://doi.org/10.1177/0950017019836911.

Lucy Cunich
About Lucy Cunich 2 Articles
Second year university student studying internet transformations and digital influence through social media.