Uber has been rather sucessfully working its way into the delivery business with Uber Eats. In the podcast “I learned something again”, head of Uber in Germany, Christoph Weigler also discusses the likelihood that Uber will deliver cannabis to Germany’s doors.
Uber Germany has been quiet. The company has now lowered its profile after years of dispute. Is it because Uber, just like other taxi companies, has very little to do with the Corona crisis? Uber offers rides to the doctor or the vaccination center in larger cities. But nothing further than this.
The company continues to work towards its global goal of becoming profitable by the end the year, despite all the difficulties. This would be a remarkable achievement considering that Uber lost 6.8 billion dollars worldwide last year. Uber is losing money as a transportation service offering competitive prices. The second pillar is much more successful: Uber Eats, the transportation service, is now competing with comapanies like Lieferando.
“The idea is comparable,” reveals Uber’s head of Germany, Christoph Weigler, in the NTV podcast, “Wieder was gelernt”. “You have an app in which offers you food quickly from a huge variety of restaurants. It is then delivered to you, but usually on a bike and not in a car, which makes more economic sense.”
Uber to focus on delivery as it struggles to profit as taxi service
Uber Eats is a gold mine. Uber could receive orders worth approximately $ 52 billion globally at least suggested by the March figures. This would be 20 billion more than the car service industry. Weigler, Germany’s chief executive, says that this is a “momentary snapshot”. The mobility industry is experiencing a strong recovery in America and England. Both areas will be built as equal pillars in the future.
Uber cannot make money as a driver service. The business model relies on the fact that drivers are independent entrepreneurs. They drive their own cars and take care of breaks, maintenance, and work hours. Uber provides them only with the app to locate customers. This is illegal in Europe. In February, the London Supreme Court ruled that Uber must properly hire its drivers. Uber can only broker orders for professional drivers in Germany. They are required to return. To the dismay of Uber’s CEO, a concession was made by German politics to the taxi industry.
New regulations causing Uber to suffer
Imagine letting someone out at a bar or restaurant where it is likely that a new passenger will soon arrive. Christoph Weigler is upset that you still need to drive empty back to your company headquarters. This causes unnecessary emissions, empty trips and more. This is what Uber is now being forced to do in Germany.
Uber’s ride-sharing service is expected to return to pre-crisis levels in the next year. However, this will not be enough. The company had received 65 billion dollars in bookings worldwide for its taxi service as early as 2019. There was still $8.5 billion in losses at the end of 2018. Because expenses rise with every trip.
Uber Eats is different. There are no obligations to return, and no taxi drivers talking about their interests. Philipp Kosok, mobility specialist from Agora Verkehrswende, says that even in this sector, little money has been made so far. He explains that German delivery companies have primarily staked their claims and secured market share. When the industry is stable, it will likely take a few more years before one can make a profit with food delivery.
The food industry is getting a bad deal
Uber Eats has yet to see success in Germany. Uber wants to do a test run first in Berlin within a few weeks. They will then challenge Lieferando, the top dog of the food delviery market in Germany.
In order to focus on lucrative markets like Asia, the Berlin Dax company, Delivery Hero, sold its German operations to Takeaway parent company Lieferando in 2018. Deliveroo’s British also left the German market a year later. The problems are getting worse and worse. Companies such as Lieferando take 30% of the receipt to place orders and then deliver them to restaurants. This is a rip-off for the food businesses that have been severely affected by the Corona crisis.
Working for Uber is not appealing
There is also the unattractiveness and monotony of the job. The working conditions can often be as bad as the margins. You don’t have to ride your bike through the city as a delivery driver.
According to Kosok, a mobility expert, there is an emerging bottleneck in finding personnel for these services at any time. They were not always the best paying employers in the past. It is clear that the best service wins when they are positioned as both a good employer and a good partner for restaurants.
With this recipe, Wolt, a Finnish newcomer to Berlin has managed to overtake Lieferando. Philipp Kosok predicts that if you want to be a successful courier, you will need to provide hourly wages, employment relationships, and compensation for maintenance of the bikes.
Christoph Weigler also agrees. The head of Uber in Germany says, “It’s definitely not advisable for the whole system to be optimized in favor of one party.” Uber Eats aims to offer a package that is appealing to all parties. This is a lesson that has been taught in the mobility sector.
Uber sets its eyes on cannabis?
Uber has big plans. The travel agency works with both supermarkets and other similar suppliers to ensure that deliveries are possible. Customers can order pizza as well as toothbrushes and other products every day. Christoph Weigler says, “We want to be a little like the operating system for cities.”
You can also deliver cannabis. Dara Khosrowshahi, the CEO of uber, can imagine it. In an interview with CNBC, he stated that if the federal level is clear, then we will certainly look into it. Germany is still far from legalizing marijuana and the situation is not disimilar in most countries around the globe. But what is the difference between a pizza, a joint and taxi? It may take some time before the dream can realised, but cannabis may be hugely profitable for Uber in the near future. This may be currnetly possible in the USA or Canada. But for Germany, they must first make it work with pizza.