RIO DE JANEIRO, BRAZIL – It isn’t easy to find a single competitor that dominates more than 80% of the market in any industry. But this is precisely the scenario we see in the delivery segment in Brazil.
iFood is leading the way and with a comfortable lead. The company has become a synonym for delivery, accumulating a series of questions about its competitive practices and complaints by restaurants that sell through the platform. The brand’s strength is such that not even Uber has been able to keep up, and it pulled out of the market on March 7.
Uber cited “exclusionary practices” and “artificial barriers” imposed by iFood as reasons for pulling out. The main example of these barriers is the exclusivity contracts concluded between iFood and restaurants, preventing them from selling through other apps. Rappi, 99Food, and the Brazilian Association of Bars and Restaurants (Abrasel) agree with this thesis. The Brazilian Administrative Council for Economic Defense (Cade) is still analyzing the issue.
Regardless of the agency’s decision, one thing is sure: the Brazilian delivery market is concentrated like a few others. And, at the moment, there are few chances of this changing.
LACK OF FOCUS AND UNSATISFIED RESTAURANTS
If not even a name as consolidated as Uber was able to beat iFood, who will? And what reasons led Uber Eats to throw in the towel?
One of the reasons was the lack of focus on the delivery business. That is the opinion of Renato Almeida, CEO of Consumer, a company that develops management systems for restaurants. With the strong participation of the company in the business of races by application, food delivery was placed as a separate segment. It lacked to develop its own strategies to grow against the competition.
Other reasons are operational. Uber Eats had a series of problems, highlighted by restaurant owners to Tecnoblog. Unable to offer a quality alternative to iFood – which also collects complaints from those who sell on the platform – the operation collapsed. And it is hard to see another delivery super-app that can thrive where Uber Eats failed.
The market is looking for options. Restaurants are experimenting with their own delivery apps and are betting on a return to in-person consumption; some are planning to leave iFood for good, despite the importance of the platform for revenues. This decision brings with it an accumulation of responsibilities: investing in its own marketing, trying to create customers who decide to access the restaurant’s channels instead of the convenience of ordering through iFood.
Other applications try to eat from the sidelines, focusing on cities in the interior. It is the case of 99Food. These also have their challenges, convincing restaurant owners to bet on the new platform after so many disappointments with iFood and Uber Eats. It will not be easy to convince these establishments.
In Almeida’s evaluation, the market trend is maturity. Restaurants realize the need to expand their options, escaping from iFood’s dependence. But what about the user? What are the incentives for them to look elsewhere for their favorite dishes?
While the other players try to answer this question, iFood is still ahead – and seeing the gap grow wider.