Ride Share Company Acquires Online Grocer Cornershop. What’s Next?
This past week, Uber made a sizeable step in their move into the grocery delivery game by acquiring Santiago, Chile-based online grocer Cornershop. Uber has been eyeing a move into the rapidly growing sector for the last couple of years. In 2018, CEO Dara Khosrowshahi described the move into grocery as “fundamental” for the future of Uber, and it’s a logical move to complement its successful Uber Eats restaurant delivery platform.
Cornershop runs a promising online grocery delivery business in Chile, Mexico, Peru and Canada. Their Canadian business, which services the Toronto market, most certainly appealed to Uber, who has made Toronto the base of operations for their developing grocery business. Even a year before the acquisition, Uber had been working to build a grocery team based in Toronto. The city has historically been a hotbed for testing for Uber, who also piloted their Uber Eats business there in 2015.
Cornershop has drawn high levels of interest in recent years from US companies such as Walmart, who attempted to acquire the company last year for $225 million before the deal was blocked by the Mexican government. Mexican officials shot down the deal over concerns that the acquisition would create an unlevel playing field, and since Cornershop provides delivery from other retailers, Walmart could potentially access data about orders placed with its competitors. This opened the door for Uber to swoop in and pick up the deal.
The acquisition elevates Uber from a potential up-and-comer to an immediate player in many ways. Cornershop gives them a solid blueprint to start from and a pre-existing customer base in several international markets. But this is likely only the tip of the iceberg in terms of their vision for grocery.
According to Uber CEO Dara Khosrowshahi, “Eating is something you do three times a day. So, these are habits that go very, very deep. And someone needs to be the orchestration layer for people moving around cities, and I think that can be us. It’s an enormous opportunity. The real challenge for us is where do we focus and where do we partner?” the Uber head told Yahoo finance in 2018. Clearly that picture is beginning to materialize.
Bringing the new grocery business under the same banner as Uber Eats presents an interesting brand opportunity for the company to be a single source answer when customers want food delivered to their homes. Restaurant or grocery store – it doesn’t matter. They hope that when you get hungry, you think Uber.
This is a competitive and ever-diversifying market, so Uber will have to push hard to be competitive, and push even harder if they want to be the one word that comes to mind when consumers get hungry. New technologies and an ever-reducing amount of transactional friction present both the largest opportunities for failure and success in this growing segment.
That being said, Uber has proven, time and time again that meeting these challenges is well within their wheelhouse. They took something as fundamental as the taxi cab and flipped the concept on its head by doing just that – introducing technology that reduces transactional friction.
What will they do with grocery delivery? Signs seem to point to autonomous drones as a likely key component in years ahead. Uber began limited drone testing earlier this year with Uber Eats in San Diego. Eric Allison, Head of the Uber Elevate program recently told Bloomberg, “What’s convinced me on drone delivery is to see how Uber Eats has grown. Our customers want selection, quality and efficiency—all areas that improve with drone delivery.”
Another key area of improvement is delivery speed. According to the aforementioned article, while a ground delivery to a location 1.5 miles away typically takes 21 minutes, a drone can make the same trip in about 7 minutes. If Uber can offer a comparable speed improvement in grocery delivery, that will go a long way toward the market dominance they’re hoping to achieve.
The acquisition of Cornershop is an important decisive step into this next chapter for Uber. For now, it will be interesting to see how Uber taps into Cornershop’s existing technologies and operations as they make their first moves into grocery. Keep an eye on what’s happening with the Uber in Toronto and San Diego over the coming months, as those are the central hubs for the grocery and drone programs, and will be likely predictors of future behavior on a national and international scale.
What do you think about Uber’s acquisition of Cornershop? What do you think the next major move will be? How long will it be before our groceries are flown to our homes by drones? We’d love to hear what you think. Sound off on social media now and join the conversation.