Yandex’s Taxi And Food Delivery Unit Says It Has Weathered Covid With Profits Intact
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| Yandex’s delivery services have been expanding of late, recently launching in Israel |
Yandex.Taxi has said that it maintained profitability during the pandemic despite the ride-hailing sector’s deep challenges in the crisis.
Aram Sargsyan, Yandex.Taxi’s regional general manager for markets including EMEA and Eurasia, said that the division of the Russian internet giant remains in the black – after first reaching profitability in late 2018 – with the pivot to food delivery playing a key role.
The Yandex.Taxi division of Yandex includes not just taxi and ride-hailing services but also food and grocery delivery, including the Yandex Lavka service. In the third quarter of this year, Yandex booked revenues of 18 billion rubles, around $250 million, in this segment.
Ride-hailing companies, most notably Uber, have seen a drastic decline in rides in 2020 due to the pandemic, upending any road maps for reaching profitability.
Sargsyan said the Russian company, whose taxi services operate in 17 countries, managed to shield itself from some of these shocks.
"Compared to competitors, they haven't been profitable. From a bad situation, they went to a super bad situation," he said.
But much like Uber, Yandex.Taxi has relied heavily on food and grocery delivery to shore up operations during this tumultuous year. This meant reallocating many resources and talent that normally focuses on ride-hailing.
"We mobilized the team [at the start of Covid] and I would say there are moments that half of the team was focused on food delivery and grocery," Sargsyan said.
"We managed to get to a speed where we were launching logistics in one country per day," he said.
"In less than three weeks’ time we completely changed the direction of the organization."
It’s not yet clear how the balance of revenues will shake out long-term and whether there will be a heavier tilt toward delivery at the expense of ride-hailing. Yandex reports its revenue for both together.
"I’m not sure that we will be ready to disclose the share of delivery revenue in the total. However, it is definitely something that is going to be fundamentally big," he said.
It's not only the base for delivery like food and grocery, but it is also going to become a base for the e-commerce business of Yandex so that will drive the growth and help to improve profitability as well."
Yandex’s delivery services have been expanding of late, recently launching in Israel.
Sargsyan is tight-lipped on further expansion but said the way that the company vets new markets has been evolving. Traditionally it would launch ride-hailing in a market and delivery would follow soon after but that could flip moving forward.
Regulation is another factor for the company to consider, especially in markets with strong regulations built around the traditional taxi industry.
Meanwhile in its native Moscow, rival Wheely has been butting heads with local regulators over data requests.
Sargsyan said Yandex has complied with the rules and disputed Wheely’s stance on the issue and the scope of the data that the latter said is being requested.
"I think Wheely was kind of exaggerating things or trying to put it in a different light. There are some agreements with the Moscow government, with the local ride hailing operators and Yandex was complying to those," he said.
"Basically the Moscow government, like any other bigger city, has a technological center that is controlling the traffic or public transportation so they want to know where the buses are moving, where the taxis are moving."