Careem starts new delivery service: ‘Deliveroo, Uber and Talabat, you’ve got company’

Careem Now will initially roll out in Dubai and Jeddah, followed by Egypt and Pakistan

Saudi billionaire Alwaleed joined a $500 million-fundraising round by Careem in 2017 and invested again in October.  Courtesy Careem

Careem has started a delivery service offering everything from food to document drop-offs as it expands beyond its ride-hailing business amid intensifying competition with its rival Uber in the Middle East.

The Dubai company plans to invest $150 million (Dh551m) in its deliveries app, Careem Now, that will include other goods and services in the future, it said in a statement on Monday. The service will initially roll out in Dubai and Jeddah, followed by Egypt and Pakistan.

"The opportunity for Careem Now is massive," Adeeb Warsi, managing director of Careem Now, said in an emailed response to questions. "Only 15 per cent of the food delivery market in our region overall currently operates via app, so there’s a huge gap in the market."

Beyond takeaway, Careem Now plans to deliver groceries, documents and home services such as cleaning in the future, according to Mr Warsi. Careem acquired online restaurant listing website Roundmenu in February and had been testing food delivery services since. The move is part of Careem's push to diversify beyond its core ride-hailing business and tap into regional opportunities in mass transport, digital payments and deliveries.

Its new app will face competition from several others, including Uber Eats and Deliveroo, but Mr Warsi is confident Careem can "hit the ground running" because it already has the customer base and technology in place to quickly meet potential demand.

"Thanks to six years in the ride-hailing space we have built a marketplace that can seamlessly and accurately match demand with supply, and at scale," he said.

Careem Now will operate on a separate platform to the ride-hailing app and will be operated independently, with Mr Warsi appointed to run the new business segment. Formerly with Boston Group Consultancy, he joined Careem in January 2017 as vice president of strategy, according to the company.

Mr Warsi declined to comment on the expected contribution of the delivery services to total company revenues next year. He also declined to say whether the $150m funding is part of the latest $200m it raised in October from existing investors to fund expansion.

Analysts say the appetite for online food delivery services is massive in the Middle East, where residents often navigate the streets by landmarks rather than postal codes and high disposable incomes means people often order their meals.

"Food delivery is the next frontier in the Middle East," said Sam Blatteis, chief executive of MENA Catalysts, a Dubai-based consultancy for technology companies and Middle Eastern policy innovation entities. "The Middle East has enormous untapped demand for food-delivery."

The move builds on Careem’s existing strengths of drivers, scale and focused execution, he said.

The company's food delivery service will operate seven days a week, in line with restaurant operating hours, and have a dedicated call centre. Prices will include a delivery fee.

"Deliveroo, Uber and Talabat, you’ve got company," Mr Blatteis said.

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