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Uber to Integrate Ride Hailing & Food Delivery Platforms

Zacks Equity Research

In a customer-friendly move, Uber Technologies UBER issued multiple updates on its app including combination of its food delivery with ride-hailing services, offering alternative travel information (including bikes, scooters and public transportation) and introduction of safety-related features.

Per the company’s CEO Dara Khosrowshahi, Uber is looking to create "an operating system for everyday life" through this overhaul. The slew of changes is aimed at integrating all Uber products into a single app.

We note that the company’s food delivery business — Uber Eats — is a successful venture as can be gauged from the 80% increase in its segmental revenues during the first half of 2019. Given this prosperity, Uber’s move to merge its food delivery app with ride-sharing service seems a prudent one. The inclusion of more travel information is designed to encourage users to avail of public transport.

To promote safety and ensure that a rider is getting into the car booked, the app will include features whereby the person can request for a four-digit PIN. Other safety features in the app include the option for riders to send a text message to 911 in case of an emergency.

As part of the revamp, Uber intends to expand its rewards program to enable customers earn redeemable points whenever they access an Uber ride or Uber Eats. Uber also aims to introduce an earnings estimator to facilitate drivers’ understanding of what they will earn from their trips.

Notably, Uber has been incurring losses due to escalated expenses on sales, promotions and marketing in a bid to attract riders as well as drivers ever since it went public on May 10, 2019. In fact, shares of the company, which suffered losses in excess of $6 billion in first-half 2019, have mostly traded below its IPO price of $45. The decision to redesign its app to include more customer-oriented features might target reducing or even eliminating the losses.

Uber’s decision to remodel its app comes close on the heels of rival Lyft’s LYFT move to modify its app in order to make it easier for customers to switch different modes of transport like scooters, bike-share and car rentals.

Uber and Lyft apart, companies like Slack Technologies WORK and Pinterest PINS have made their trading debut this year.
 

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