Uber is launching an on-demand grocery delivery service in Latin America and Canada, the company announced on Tuesday. It’s Uber’s first major move into the competitive world of online grocery shopping since acquiring Cornershop, a leading online grocery provider in Chile, Mexico, Peru, Canada, Brazil, and Colombia.
Grocery delivery will be available through both Uber’s main app and its Uber Eats app. Customers will see food delivery available from local grocery stores and will be able to receive their orders “in as little as one to two hours,” according to Uber Eats head of product Daniel Danker.
The service is available starting today in 19 cities across Latin America and Canada. Later this month, it will be available in the US, Danker said. And when it launches, it will be included in Uber’s subscription services, Rider Pass and Eats Pass, in which customers can get free delivery on orders over $30.
The announcement also comes on the heels of Uber’s $2.65 billion acquisition of Postmates. Uber is scrambling to expand its food delivery options as the coronavirus pandemic continues to pummel its core ride-hailing business. At the height of the pandemic in April, Uber said its ride-hailing division was down about 80 percent. And now, with the number of cases spiking in many parts of the US, the company’s losses could continue to mount.
“I think this would make a lot of sense in a pre-COVID world,” Danker said in a call with reporters. “But our world has just fundamentally changed. And so this represents even more of a huge responsibility for us.”
It’s not hard to see why Uber is banking so much on food delivery. Bookings in the company’s Uber Eats division were up more than 54 percent year over year, thanks to increased demand for food deliveries, the company reported in May. Meal delivery has seen an acceleration in demand since mid-March, with 89 percent year-over-year gross bookings growth in April excluding India. But the company has also moved fast to abandon its unprofitable markets, recently shuttering its Eats business in eight countries.
Uber is entering a crowded field, with huge companies like Amazon and Instacart jockeying for market share with major grocers like Kroger and Walmart. And it’s not an obvious moneymaker either. Last year, only 3 percent of grocery sales in the US take place online. Sales are certainly increasing during the pandemic — US online grocery revenue hit a record $7.2 billion in June — but customers say they feel hesitant to shop for groceries online for fear of being overcharged or experiencing late deliveries, according to a recent survey.
Cornershop was founded in 2015 in Santiago, Chile. The company was almost acquired by Walmart for $225 million in 2018, but Mexican antitrust regulators ultimately blocked the deal, arguing Walmart could not guarantee a level playing field for its rivals.