We've been told that evil VCs subsidize service to run at below cost to drive competitors out of business. Uber is often accused of this. Why aren't we seeing that phenomenon here? And Uber is literally one of the competitors.
There are some other possible reasons tho, like food actually not being as "commodity"-like as we think it is (like rides are)
The other hypothesis is that delivery is simply expensive. The driver has to drive to the pickup place, find parking, stand in line potentially for awhile, drive to the delivery, park again, walk to the delivery location to drop off the item. Most of those things an ordinary uber fare would not have to deal with.
Reminder that Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm and eBay all colluded to keep engineer compensation below market value[1].
[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
A claim that all of these have formed a cartel requires strong evidence.
And 2 of those are potentially combining.
Looks like a split amongst 4 right now, as far as the big ones go. This doesn't include the smaller startups as well.
If you went to a VC with a model for a food service delivery taking less than 30% of the transaction, they'd more than likely pass. 30% is the bar that's been set, and your unit economics have to be as good or better than the existing players. They're not keen on investing in "just a cheaper version of something that already exists." -- If you're marketing yourself as "cheaper," it has to because some innovation has eliminated more cost out of the transaction than you have eliminated in net revenue.
And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back with ride fees. Next competitor that can replicate UX of UBER, but raises less capital will be very well positioned to offer competitive pricing. And switching between these platforms is much easier compared to something like Facebook/Apple.
Grub-less et.al are as much about ordering and checkout as they are about discovery. I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful.
Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.
I suspect most customers are either starting looking for a restaurant they know by name, or one near them to ensure maximum freshness, using Google Maps or Yelp or the like. Only when they've already chosen a restaurant do we transition into the delivery app flow.
I'm sure a lot of money is being spent for chain restaurants to advertise "order via Postmates" or "exclusively on GrubHub"-- again bypassing them as a discovery system.
There is an argument to be made, that if I just want a pizza, then my major decision-maker will be price.
Your moat argument is the same that had people invest in uber 10 years ago, which we are seeing is failing in regions like EU where Uber is getting lambasted.
Of course, you'd have to be rich in order to have done that in the first place (an "accredited investor" as defined by the SEC), and this ignores the other investments you made in 2010 that went bust.
Later investors got screwed by the poor IPO performance, especially those that bought, hard, into the "moat" argument. Hell, softbank is possibly underwater on its investment.
But because they have an insurmountable most (not earned via any sheer technical breakthrough, just through cunningness and being ruthless) they don't need to care if they have too many engineers,whether these engineers are any good, or if their nodejs ec2 instances serve 100 queries a minute. So they just keep it like that.
Companies like IBM needed decades to get into such a rot, modern VC funding and cloud computing have just accelerated this phenomenon.