The mobility giant’s new offering will now enable users to send large packages up to 750 kg through Courier XL. As of now, the service, allowing live tracking and upfront pricing, has been launched in Delhi-National Capital Region and Mumbai. Uber plans to launch it in other cities over the next few months.
While Uber is doubling down on its courier service, Swiggy recently shut a similar delivery service that allowed users to send and receive items weighing up to 12 kg, citing “operational constraints”.
As Uber pushes for big item deliveries, Mint examines the company’s strategy and if it can tackle the challenges inherent to the space.
Why is Uber getting into large deliveries?
Uber’s expansion into large deliveries signals the company’s renewed interest in hyperlocal logistics. As the company navigates fierce competition and tight margins in its core ride-hailing business, large goods delivery can become a new revenue stream with room for disruption.
One important factor that will come into play is the expansion of Uber’s customer base from individual users to small and medium enterprises (SMEs) and other business-to-business partnerships, which can potentially translate to better margins and recurring revenue.
The Uber India team has been quietly building a presence in the courier-delivery space through its 2-wheeler fleet for a while now, so expanding into larger deliveries is a logical progression, according to Paramdeep Singh, an early investor in venture-backed logistics startups Zippee. “Success will depend on Uber’s ability to operationally sweat its dense network, build sustainable demand, and maintain service quality at scale,” he said.
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How big is the market for large deliveries?
The market for large-item deliveries—think furniture, appliances, and bulky business shipments—is vast but largely untapped. While the food and parcel delivery space has become crowded and fiercely competitive, the large deliveries segment remains relatively less saturated.
According to industry estimates, India’s intra-city logistics market is valued at $30-40 billion, with a majority of it in the unorganised sector. With only a few tech-driven players in this space, the large deliveries segment is ripe for disruption. It offers ample room for innovation in pricing, reliability, and service experience, making it an attractive bet for companies like Uber looking to diversify.
Who are the existing players in this space?
From Delhivery’s ecommerce packages-focussed model to Rivigo and BlackBuck’s inter-city transport business and Let’s Transport’s enterprise logistics business, many startups have emerged to solve for different solutions in the logistics space across warehousing, couriers and ecommerce.
Porter is among the few players that got into the B2B logistics space, focusing on SMEs, and has been enjoying a stronghold in the category for over a decade with limited competition. The company dominates the space, with over 500,000 driver partners and more than 10 million customers. Several of its peers such as Moovo, Shippr, Zaicus, Blowhorn have either closed shop or are struggling. Uber, like Porter, is going in with an asset-light approach, directly competing with the latter.
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Does Uber have an edge?
Experts say Uber’s infrastructure and technology provides it an edge over other companies in the large-deliveries category. “This segment offers scale but is heavily execution-driven. Uber’s brand trust, driver supply, and tech infrastructure give it a credible edge that many past and future entrants lack,” said Paramdeep Singh.
Besides, Uber’s technology—user-friendly apps and marketplace algorithms—enables rapid deployment of services like Courier XL, according to Appalla Saikiran, an investor and founder of networking platform Scope. Uber’s brand, economies of scale, and data analytics capabilities provide a competitive moat, which will allow it to absorb market shocks and outlast smaller players, he added.
What are the challenges?
From pricing, unit economics, B2B network effects, and competition, all of which are difficult to crack, the playbook in large goods delivery is different from rides or parcel delivery. As a listed company in the US, Uber will face pressure from a capital and margins perspective. Competition from Porter, which has a massive headstart having built the business over the years, will also be a big challenge.
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