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No more Uber Eats in Bangladesh from June 2
Muhammad Zahidul Islam
In a rather surprising move, Uber Technologies yesterday announced that it is closing down the operations of its food delivery platform Uber Eats in Bangladesh from June 2 as Chief Executive Dara Khosrowshahi attempts to steer the ride-hailing giant through the coronavirus pandemic.
Uber Eats arrived in Bangladesh in April last year and soon gained popularity with its solid service. The food delivery platform was one of the few to be offering its services during the countrywide general shutdown since March 26 to flatten the curve on coronavirus.
“After a year of partnering with local restaurants to offer convenient and reliable food delivery, we have made the difficult decision to discontinue Uber Eats in Bangladesh, on June 2nd 2020,” read a notice on the Uber Newsroom yesterday.
The notice did not articulate the reasons for leaving Bangladesh.
But as per global media, Bangladesh is not the only market in which Uber Eats is shutting shop; it is doing so in other markets where it saw no clear route to becoming the number one or number two online food delivery operator.
On Monday, in an email to staff, Khosrowshahi said Uber was closing 45 offices and laying off some 3,000 more people and re-evaluating big bets in areas ranging from freight to self-driving technology.
Khosrowshahi’s latest restructuring plan comes less than two weeks after the company said it would eliminate about 3,700 jobs and planned to save more than $1 billion in fixed costs. Monday’s decision means Uber is shedding roughly a quarter of its workforce in under a month.
Stay-at-home orders have ravaged Uber’s core ride-hailing business, which accounted for three-quarters of the company’s revenue before the pandemic struck. Uber’s rides business in April was down 80% from a year earlier.
However, Uber will continue its ride services in Bangladesh, which has been going from strength to strength since entering the country in 2016.
“Our number one priority now is to do everything possible to minimise the impact on our valued employees, restaurant partners, delivery partners and consumers who have supported us,” adds the notice.
The notice though took the local startup industry by surprise.
About the Uber Eats exit declaration from the market, AD Ahmad, chief executive and co-founder of HungryNaki, Bangladesh’s first food delivery platform, said the San Francisco-based company had burnt a huge amount of cash and already created a handsome customer base in the country.
“It is true they have brought a good number of customers who were not using the food delivery service before.”
This was good for the overall food delivery industry in Bangladesh.
“But in my personal view, burning a huge amount of cash to gain customers is not a decent business model to continue.”
A few days ago they also announced the closure of operations in some other markets as they could not create much impact there despite shelling out a pretty sum.
“Burning money is not an acceptable model anymore and that is why they have been criticised in different markets,” Ahmad added.
Soon after launching the service in Bangladesh, Uber Eats have been offering huge discounts like Tk 300 to Tk 600 per order.
According to a report of Reuters, Uber Eats is also closing down operations in eight markets including the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine and Uruguay.
In the UAE, it will wind down the Eats app and transition operations to Careem. About 50 full-time roles would be affected, Reuters reads.
Uber said the discontinued and transferred markets represented 1 per cent of Eats gross bookings and 4 per cent of Eats adjusted core earnings losses in Q1 2020.
However, in the US, Uber is in talks to acquire its rival food delivery platform GrubHub, a deal that would help stem losses from the cost-intensive business of building out delivery operations and give Uber an edge in competing with industry leader DoorDash Inc.
After its founding in 2009, Uber quickly became one of the world’s hottest start-ups, transforming how millions of people get around. Co-founder Travis Kalanick envisioned a future in which robotaxis roam streets and delivery drones fly overhead -- with Uber at the centre of it all.
As the company grew, it spent big to expand into areas beyond ride-hailing, amassing billions in losses along the way.
Investor enthusiasm started to wane even before the pandemic. Uber had one of last year’s most anticipated stock market debuts. The result disappointed, with Wall Street increasingly wanting to see a path to profitability for Uber and other high-profile tech companies.