Uber Eats, the delivery unit of a popular digital taxi firm, has announced an expansion of its services. On top of delivering food, they’ve raised the stakes by offering a whole new ballgame of deliveries. Now, they’re bringing the heat with household supplies, pharmaceuticals, and even a splash of alcohol.
The ride-hailing industry in Kenya has witnessed intense competition and faced strict regulations, resulting in reduced profits for companies operating in the sector. To counter these challenges, Uber Eats has responded to consumer demands and diversified its offerings. Wangui Mbugua, the General Manager of Uber Eats Kenya, expressed the inevitability of exploring other sectors to broaden revenue streams. By partnering with a wide range of merchants, Uber Eats enables customers to conveniently receive diverse non-food items through their app.
Bolt Food, a close competitor to Uber Eats has also entered the non-food delivery market. Recognizing the need to diversify revenue streams in an increasingly competitive landscape, Bolt Food’s Country Manager, Edgar Kitur, emphasized the importance of adapting operations to maintain a strong position within the industry.
The move towards diversification coincides with the emergence of local ride-hailing applications, such as Showfa and Yego, which have introduced strong competition for Uber and Bolt, particularly in the mobility segment of their businesses.
In Africa, Uber Eats is currently rocking the boat in Kenya and South Africa, which have been their cash cows on the continent since 2017. However, the competition is no picnic in these parts. Back in 2013, when Uber first set foot in Kenya, they had a monopoly as the lone ranger in the digital taxi world. Fast forward to today, and there are over 20 digital taxi apps running the show in various nooks and crannies across the country. In response, both Uber and Bolt decided to spread their wings beyond Nairobi, now making waves in Nakuru, Kisumu, Mombasa, Naivasha, and Eldoret.
When it comes to Tanzania and Uganda, the international ride-hailing companies have an easier go of it. Tanzania has approximately 14 ride-hailing apps, but the competition is not as cutthroat as in Kenya. Meanwhile, Uganda has fewer than 10 players in the game, giving the big fish a bit more room to swim.
Aside from increasing competition, mobility companies are also grappling with the impact of reduced driver commissions in Kenya. The government has capped the commission at 18 percent, significantly lower than the 25 percent earned in Uganda and Tanzania. This regulatory change has added to the challenges faced by companies like Uber and Bolt.
Globally, Uber’s delivery segment has experienced rapid growth, outpacing its mobility unit in terms of revenue generation. In 2021, the delivery segment brought in revenues of Sh1.14 trillion, surpassing the Sh1.03 trillion earned by the mobility unit during the same period. However, despite raking in the dough with those eye-popping revenue figures, Uber is still struggling to turn the tide and make a pretty penny. The cutthroat competition in the global market has been a hard nut to crack for them. In fact, they spilled the beans and reported their largest-ever loss of Sh1.25 trillion last year. Their most recent profitable year was way back in 2018, when they hit the jackpot and banked Sh137 billion ($9.1 billion).