"Even at $0.21 that’s ~$2B of promotional expense that Uber can still remove from the P/L." What's the reason to believe promotional expense eventually goes to zero? It's seems like steady state for both rideshare and delivery is likely to contain some form of discounting through consumer incentives.
Yeah there'll certainly be some, but my sense is a significant portion is in delivery which is seeing rapid rationalization (especially intl/Europe). It won't go to zero but could easily see it significantly lower.
Thanks. Really enjoy the analysis. Do you have a sense on why Uber keeps falling short on delivery? It seems like all the Grubhub share loss is going straight to DD. While you would expect that Uber being a platform with more to offer and ability to cross-sell, it should be the other way around. Plus, Uber One should be a more valuable proposition to users than DashPass. Often Selection is raised as the key advantage of DD, but it feels Uber should have had plenty of time to catch-up on that.
I do think Dash has done a far better job on execution for supply and consumer satisfaction which counts for something. I think it comes down a bit to Uber's focus on profitability especially on the unit economics side. Dash is still heavily investing in convenience which inflates GBV a bit but isn't necessarily better from a unit economic perspective. So far we've seen the better profitability and FCF from Uber as they've traded off some GBV for margin and Dash has more patience and tolerance for loss-making behavior than Uber. On the customer acquisition side for Uber they're definitely benefiting, on the Q4 call they noted CAC for cross-selling is 1/4 what GOOGL, FB/Insta, etc is combined.
We'll see whether it starts showing up on the GBV side, although the chart makes it appear Grubhub share is going just to Dash, but it's definitely going to both, but likely at a 65/35 split to Dash/Uber.
"Even at $0.21 that’s ~$2B of promotional expense that Uber can still remove from the P/L." What's the reason to believe promotional expense eventually goes to zero? It's seems like steady state for both rideshare and delivery is likely to contain some form of discounting through consumer incentives.
Yeah there'll certainly be some, but my sense is a significant portion is in delivery which is seeing rapid rationalization (especially intl/Europe). It won't go to zero but could easily see it significantly lower.
Thanks. Really enjoy the analysis. Do you have a sense on why Uber keeps falling short on delivery? It seems like all the Grubhub share loss is going straight to DD. While you would expect that Uber being a platform with more to offer and ability to cross-sell, it should be the other way around. Plus, Uber One should be a more valuable proposition to users than DashPass. Often Selection is raised as the key advantage of DD, but it feels Uber should have had plenty of time to catch-up on that.
I do think Dash has done a far better job on execution for supply and consumer satisfaction which counts for something. I think it comes down a bit to Uber's focus on profitability especially on the unit economics side. Dash is still heavily investing in convenience which inflates GBV a bit but isn't necessarily better from a unit economic perspective. So far we've seen the better profitability and FCF from Uber as they've traded off some GBV for margin and Dash has more patience and tolerance for loss-making behavior than Uber. On the customer acquisition side for Uber they're definitely benefiting, on the Q4 call they noted CAC for cross-selling is 1/4 what GOOGL, FB/Insta, etc is combined.
We'll see whether it starts showing up on the GBV side, although the chart makes it appear Grubhub share is going just to Dash, but it's definitely going to both, but likely at a 65/35 split to Dash/Uber.