In a move that should surprise no one, Uber CEO Dara Khosrowashahi said that it makes sense for his company to make the move into the grocery delivery space. Speaking at Vanity Fair’s News Establishment Summit yesterday (h/t Yahoo Finance), Khosrowashahi said:
“With Eats, we’re getting into the business of moving food around. I think that this product of delivering great quality food to you at home in 30 minutes or less is magical and is going to move into grocery in a way that’s fundamental and a lot more people are going to be eating at home…you can absolutely see grocery as being an adjacency.”
At the end of the day, Uber is in the business of moving things from place to place, be it people or Big Macs. As online grocery shopping is predicted to hit $100 billion by 2022 and retailers ramp up their delivery efforts to win your business, it makes sense for Uber to try and get a piece of that action. Everyone eats, after all.
But is the transportation behemoth coming in too late? Khosrowashahi even alluded to potential pitfalls during the same talk when he said: “The real challenge for us is where do we focus and where do we partner.” Finding a partner could be where the company’s grocery dreams get spoiled.
Uber had previously tried a deal with Walmart for grocery delivery, but that arrangement went bust, and right now a lot of grocery players already have delivery dance partners. Whole Foods has Amazon. Target has Shipt. Walmart uses Deliv, Postmates and DoorDash (an Uber Eats restaurant delivery rival), and also launched its own Spark delivery service. Albertsons uses Instacart. Kroger uses Instacart as well, but is building out its own logistics infrastructure through its Ocado investment and piloting driverless delivery vehicles with Nuro.
So who’s left? Unless Uber can promise a vastly better or cheaper experience, what is the incentive for the big retailers to partner with a company that is only partly focused on grocery delivery?
Uber has one weapon in its arsenal that could give it an edge in denser, urban areas. Earlier this year, Uber bought Jump and its electric bike sharing business. These electric bikes could be outfitted with some small-ish temperature controlled delivery trailers to hold groceries. This would give Uber a nimble fleet of delivery vehicles that won’t get stuck in traffic or need to find parking outside of residential buildings. While the delivery area may not be as broad, in highly populated areas, it could be more advantageous to use bikes than cars or vans.
We’ll have to see how Uber enters the grocery delivery market, and whether its eyes are bigger than its proverbial stomach.