Grubhub And Seamless Merger Essay
Opinion Piece
Grubhub to Merge with Seamless
Two of the biggest names in the online food delivery industry are set to merge. Grubhub and Seamless are two online food delivery rivals that compete in a very fast, endlessly growing market and the companies have decided to become one super delivery service.
Grubhub and Seamless, two privately held companies, compete in the online food delivery industry, which is a relatively new industry that is growing at a fast rate. More and more start-ups are entering the market due to the very little existence of barriers to entry. “International players and local start-ups are piling into the restaurant-to-home food delivery business, hoping to cash in on a growing multi-billion-dollar market in Canada” …show more content…
(Shore). Grubhub and Seamless’ presence in the market is enormous. In 2012, it was found that the total amount of orders through the two privately held companies reached $875 million, resulting in combined revenues of more that $100 million (Fowler). Before deciding to merge, in 2011, Grubhub bought the parent company of Campusfood and Allmenus and Seamless had acquired Menupages also in 2011 (Holpuch). This infers that both companies, even before deciding to merge, were making attempts to gain more market share and gain competitive advantage.
Grubhub is based out of Chicago while also serving many other regions in the United States. They have a dominant hold over much of the Midwest. Seamless has an evident grasp over the New York territory as well as other major cities across the U.S. while also positioning themselves in the UK as well. Covering this vast territory will be made easier once they have merged and they will be able to serve in more territories than they already do. It is estimated that “the new company will serve more than 500 cities and enable food orders at more than 20,000 restaurants.” (Holpuch)
The intentions for this merger are quite clear, to gain more market share, thus increasing market power, in an industry in which they were competing against one another.
Because this industry is growing and more and more companies are entering, this merger will help these two companies increase their power, which will threaten the smaller more local services like Eat24.com in California or Delivery.com. Therefore, this merger will be eliminating the competition since the only intense competition in the market existed between Grubhub and Seamless themselves. This means that not only will they now have a very larger percentage of market share; they will have stifled the competition considerably. Because they compete in a fast-cycle market, Grubhub and Seamless were continually seeking ways to improve and maintain their competitive advantage; this merger will have accomplished that, giving these two firms an incredible advantage over their competitors. Matt Maloney, Grubhub’s co-founder and chief executive said, "By combining our complementary restaurant and diner networks, we are well positioned for continued growth in a massive market." (Holpuch)
This merger will be very beneficial to the new super delivery company. Grubhub and Seamless are such big players in the market that due to their merger, the competitive scope of the market will be reshaped in the process, taking the two biggest competitors and combining them to make one large delivery service, capable of serving more customers. Another benefit is that because these firms are already well established and have experienced success in the past few years, they could benefit from working with each other, learning and developing new
capabilities.
To implement this strategy Seamless and Grubhub should really make sure proper research is done on the market (i.e. forecasted growth) to make sure their strategy is logical and coherent with what is going on currently in the market they compete in. they should have also done preliminary research on each other’s companies and what each of them have as core competencies in order to leverage them to be successful in the industry.
Works Cited
Fowler, Bree. NBC News Business. 20 may 2013. 17 november 2013 .
Holpuch, Amanda. The Guardian. 20 may 2013. 17 november 2013 .
Shore, Randy. Vancouver Sun. 19 september 2013. 17 november 2013 .
Grubhub to Merge with Seamless
Two of the biggest names in the online food delivery industry are set to merge. Grubhub and Seamless are two online food delivery rivals that compete in a very fast, endlessly growing market and the companies have decided to become one super delivery service.
Grubhub and Seamless, two privately held companies, compete in the online food delivery industry, which is a relatively new industry that is growing at a fast rate. More and more start-ups are entering the market due to the very little existence of barriers to entry. “International players and local start-ups are piling into the restaurant-to-home food delivery business, hoping to cash in on a growing multi-billion-dollar market in Canada” …show more content…
(Shore). Grubhub and Seamless’ presence in the market is enormous. In 2012, it was found that the total amount of orders through the two privately held companies reached $875 million, resulting in combined revenues of more that $100 million (Fowler). Before deciding to merge, in 2011, Grubhub bought the parent company of Campusfood and Allmenus and Seamless had acquired Menupages also in 2011 (Holpuch). This infers that both companies, even before deciding to merge, were making attempts to gain more market share and gain competitive advantage.
Grubhub is based out of Chicago while also serving many other regions in the United States. They have a dominant hold over much of the Midwest. Seamless has an evident grasp over the New York territory as well as other major cities across the U.S. while also positioning themselves in the UK as well. Covering this vast territory will be made easier once they have merged and they will be able to serve in more territories than they already do. It is estimated that “the new company will serve more than 500 cities and enable food orders at more than 20,000 restaurants.” (Holpuch)
The intentions for this merger are quite clear, to gain more market share, thus increasing market power, in an industry in which they were competing against one another.
Because this industry is growing and more and more companies are entering, this merger will help these two companies increase their power, which will threaten the smaller more local services like Eat24.com in California or Delivery.com. Therefore, this merger will be eliminating the competition since the only intense competition in the market existed between Grubhub and Seamless themselves. This means that not only will they now have a very larger percentage of market share; they will have stifled the competition considerably. Because they compete in a fast-cycle market, Grubhub and Seamless were continually seeking ways to improve and maintain their competitive advantage; this merger will have accomplished that, giving these two firms an incredible advantage over their competitors. Matt Maloney, Grubhub’s co-founder and chief executive said, "By combining our complementary restaurant and diner networks, we are well positioned for continued growth in a massive market." (Holpuch)
This merger will be very beneficial to the new super delivery company. Grubhub and Seamless are such big players in the market that due to their merger, the competitive scope of the market will be reshaped in the process, taking the two biggest competitors and combining them to make one large delivery service, capable of serving more customers. Another benefit is that because these firms are already well established and have experienced success in the past few years, they could benefit from working with each other, learning and developing new
capabilities.
To implement this strategy Seamless and Grubhub should really make sure proper research is done on the market (i.e. forecasted growth) to make sure their strategy is logical and coherent with what is going on currently in the market they compete in. they should have also done preliminary research on each other’s companies and what each of them have as core competencies in order to leverage them to be successful in the industry.
Works Cited
Fowler, Bree. NBC News Business. 20 may 2013. 17 november 2013 .
Holpuch, Amanda. The Guardian. 20 may 2013. 17 november 2013 .
Shore, Randy. Vancouver Sun. 19 september 2013. 17 november 2013 .