What Retailers Can Learn From Uber's Pursuit Of Grubhub
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Uber, the ubiquitous taxi replacement app, and Grubhub, the food delivery app, might soon be one, according to media reports.
Negotiations are proceeding, and politicians are already weighing in, so although the merger/acquisition might never happen, there are still some interesting lessons for retailers.
Lesson #1 If you grow a substantial business that stands out in the marketplace, you can potentially become an acquisition target of another player in the market. For retailers looking to cash out, being acquired can be a great option.
Grubhub strove to become a class A company, and now it's being rewarded by interest from a deep pocketed buyer.
Lesson #2 If you feel that your store has already exhausted all of its growth potential, then it might be time to make an acquisition.
Uber might have decided that its car service business was getting maxed out, and that Grubhub could be the key to revenue growth. By buying the food ordering app, Uber will instantly have a new revenue stream.
Lesson #3 Buying an existing (high priced) business can outweigh the risks of building a (low cost) startup.
Uber could have continued to expand its own food ordering app, Uber Eats, but even though buying Grubhub will be exponentially more expensive than growing its own app, Uber has chosen to pay for an existing and established company.
Buying a running business can be very expensive, but you can gain from the acquisition of assets, supplier contacts, inventory, property/leases, and an existing customer base.