Lyft Is Going All-In On Delivery Business To Take On Uber Eats
Lyft Inc (NASDAQ: LYFT) President John Zimmer said Tuesday the company is expanding its deliveries business after finding success with a pilot program during the COVID-19 pandemic.
Zimmer, talking to investors on the company's third-quarter earnings call, said Lyft has been "very pleased" with the essential deliveries pilot, which it had launched to provide drivers with incremental opportunities to earn during the pandemic," as per a Motley Fool transcript.
Lyft has since expanded the program, as per Zimmer. "[The retailers have] told us that current delivery models with their expensive commissions are not working for them. And they've emphasized that the overall incentives are not aligned between delivery platforms and individual retailers," the Lyft co-founder said.
"This creates a significant and differentiated white space opportunity to help retailers and local businesses fulfill their organically obtained traffic," he added, as per the Motley Fool.
According to Zimmer, Lyft can fill the need of businesses to have a delivery service that "does not step in between them and their customers," saying such a model plays to the strength of the ride-sharing company and a place where its existing technology can be fully utilized.
Why It Matters: The service, when expanded, will compete with the likes of rival Uber Inc’s (NYSE: UBER) Eats unit along with others.
While Uber mitigated adverse business conditions in the U.S. rideshare market with gains incurred from its food delivery business, Lyft is only a player in the transportation segment.
Lyft released its third-quarter earnings on Tuesday, reporting a revenue of $499.7 million, which beat analyst estimates of $486.5 million.
Adjusted loss of $1.46 per share missed the estimate of a loss of 91 cents per share.
Lyft’s revenue beat compares favorably with the SoftBank Group Corp (OTC: SFTBY)-backed Uber, whose Q3 revenue of $3.1 billion was lower by 2% than market consensus even when taking into account its growing food delivery business.
Both ride-hailing companies stand to gain from victory in a California ballot proposition that exempts them from classifying drivers as employees.
Price Action: Lyft shares traded 5.24% higher in the after-hours session at $37.94 on Tuesday after closing 4.35% lower at $36.05.
See Also: Benzinga Survey: Will Uber Or Lyft Stock Grow More By 2025?
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