Food delivery from Yandex — Delivery Club and Yandex.Food in the same hands

Hello.

Before our eyes, a monopoly is being formed in the field of ready-made food delivery aggregators, a competitive

the market that until recently existed will disappear.The reason is that VK has consolidated the ownership of Delivery Club and is selling this business to Yandex, in return it receives Yandex.News and Zen. The exchange of assets for Yandex is interesting, as the company is getting rid of problematic news and Zen, they carried political risks for the company. At the same time, it receives food delivery and becomes the largest player in Russia in this niche. In order not to think of anything, let's read the Yandex press release about this event and what the company plans to do with the received service.

Internet, August 23, 2022. Yandex buys food and groceries delivery service Delivery Club from VK. The company will continue to develop the Delivery Club brand, the app and website will continue to work as before.

After the deal was closed by Delivery Club and Yandex Foodmove to a single technology platform. Due to this, the density of orders, that is, their number per square kilometer, will become higher. Couriers will be able to carry out more deliveries within the area - and, accordingly, earn more. Users, in turn, will receive orders faster, and the choice of restaurants will expand.

New for couriers
Couriers cooperating with Delivery Club will receiveaccess to the Yandex Pro platform. It distributes orders and builds optimal routes. For example, if two orders are received from the same house, Yandex Pro will tell you that they can be brought together, even if they were made through different services. Couriers will retain the benefits already offered by Delivery Club and will receive new ones: insurance for the time of delivery, analogue of sick leave, legal assistance, and so on. Delivery Club will join the principles of cooperation with couriers along with Yandex services and other food tech market players.

New for restaurants and shops
Delivery Club partner restaurants will havethe ability to expand the delivery area through integration with Yandex Delivery. This will attract new customers and increase the number of orders. In the future, restaurants will also have access to promotion tools developed by Yandex and will be able to accept and earn Plus points.

Stores cooperating with Delivery Club andrestaurants will be able to take part in the work of an independent industry commission created by Yandex Food. The task of the commission is to monitor compliance with the principles of open and equal interaction between Yandex food tech services and their partners. She considers the appeals of partners and analyzes controversial cases. Along with representatives of shops and restaurants, the commission will include experts from the retail and restaurant business.

“According to our estimates, in 2021 the market volumedelivery of ready-made food and products exceeded 650 billion rubles. The delivery service is offered by both specialized services and the establishments themselves - you can place an order on their website or by phone. We expect the market to continue to grow at least 20% per year in the coming years, with delivery becoming a daily service for millions of people. Merging with Delivery Club will allow us to allocate more resources for development and respond faster to the wishes of users, restaurants, stores and couriers,” says Dmitry Masyuk, head of the food tech direction at Yandex.

A binding agreement under which Yandexbuys the Delivery Club service, and VK buys Zen and News services, the companies signed on August 22. The deal is expected to close in the coming months; it requires approval from the Federal Antimonopoly Service.

The companies applied to the FAS for approval of the transaction, andHere you need to understand what exactly will be counted. If we take into account only the delivery of ready-made food, namely aggregators, then the two largest players are Yandex.Food and Delivery Club. According to Tinkoff Data, in March 2022, the first service occupied 35% of the market, the second - 42%. The total is 77% for two, the dominant market share without any discounts. For Yandex, such an interpretation of the market is unprofitable, so the company will insist on estimating the entire delivery, most likely, including a separate delivery of restaurants. It also follows from the press release that Yandex includes not only ready-made food, but also products in the delivery. This makes it possible to underestimate the share of the merged company and make it less noticeable. The game with numbers is such that the FAS is likely to take Yandex's point of view, although, in fact, this is a market for food delivery aggregators, and here the combined company becomes the largest player.

We already have an analogy that is appropriateremember, the acquisition of Uber by Yandex.Taxi. The approach was exactly the same, no change. They applied to the Federal Antimonopoly Service for approval of the transaction, pointed out the presence of high competition in the taxi market, the presence of many taxi companies and individual entrepreneurs. It is appropriate to forget to say that the aggregator always outperforms the latter and can twist their arms.

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Analytical Center under the Government of the Russian Federationpublished interesting taxi figures for 2021. Revenues of taxi companies and aggregators were distributed approximately equally for the first time, that is, aggregators have grown very aggressively over the years. In absolute terms, it was 83 billion rubles each. In 2019, Yandex was the market leader in taxi aggregators — 27%, in 2021 the company's share increased to 66%. This is a consequence of the monopolization of the market, squeezing out competitors. Let's look at the shares of companies: Yandex.Taxi - 66%, Citymobil - 8.3%, Maxim - 7%, Lucky Group - 7%, Gett - 6.6%. In 2022, Gett exited the market, and Citymobil was sold to Taxovichkoff, as shareholders were unable to maintain business in an ever-deteriorating environment. The monopoly, which is Yandex.Taxi, determines all the parameters of the market, the cost of a taxi has consistently grown along with the share of this service. In Moscow, where taxi services are popular, we de facto have no alternative to the service from Yandex, it takes up to 80% of all trips. And this was the result of the fact that competition in the market has disappeared, just as today the rise in prices has practically not been stopped by anything, taxis have become noticeably more expensive. Last year, the cost of travel increased by an average of 25%, although, using all sorts of tricks, we are assured that the increase did not exceed 5-7%. I don’t know about you, but since 2020, the average cost of a trip has gone from 500-600 rubles to 1,100-1,200 rubles. It turns out that in a couple of years prices have grown very noticeably, which is also clearly seen in Yandex's revenue from this segment.

From the point of view of ready-made food delivery aggregatorsexactly the same thing will happen. Business does not like to invent new tricks, it uses proven solutions, and Yandex is no exception. The company is creating a monopoly that will gradually raise prices for its services, which, however, is already happening, for example, a service charge for delivery was introduced, which is opposed by the FAS.

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Any monopoly is bad, imagine thatus in the market instead of four mobile operators there would be only one. The prices would be much higher, and most importantly, there would be no alternative - like it or not, but you would be tied to the solutions of one company. Today there is a choice, and no one is left without a connection, you can find the operator that will work well in those places where you are constantly located. Or, in extreme cases, use a combination of them.

We conducted a survey on how you feel about the emergence of a monopoly, the answers are typical.

The survey can be found here

Unlike FAS officials, I am sure that inIn the medium term, food delivery from Yandex (including the Delivery Club) will increase in cost for the consumer, and the emergence of new players will be impossible. The situation with the taxi will repeat, there will be no difference. An example is before our eyes, and anyone can see this for themselves. I will leave the stories about the high level of competition in the taxi market to the conscience of the storytellers. I don’t like this situation, although, unlike a taxi, I didn’t become a regular user of ready-made food delivery services, I don’t like the amount of plastic and packaging that is consumed in this case. The second and more important point is that you don’t like the taste of familiar dishes after delivery, it’s easier to get to a restaurant and eat there.

On the other hand, given the cost of shipping,it is definitely not worth waiting for the rapid development of delivery services, in the coming years such services will lose their audience, people become more rational and refuse additional expenses. The suspension of fast food chains also had a negative impact on performance, but the impact of this factor is temporary. Ultimately, the question is how much share delivery aggregators can take, whether they can displace restaurants' own delivery or not. My opinion is that aggregators will not be able to dominate and attract all restaurants and cafes under their banners. Strong players in this market will try to control for buyers, including delivery.

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