Uber on Track to be a $1B Grocer
Two recent acquisitions and the addition of new food retail partners have Uber on a pathway to facilitating $1 billion in grocery sales annually.
The revelation of the inroads in grocery made by San Francisco-based Uber, a company best known for disrupting the world of transportation, came as it revealed a triple-digit growth rate for its overall product delivery business during the quarter ended Sept. 30. Based on increased demand for a grocery delivery service launched in early July and the impact of the two recent acquisitions, Uber said that it's on track to facilitate $1 billion in grocery sales annually.
The company noted that its total delivery bookings, the value of merchandise delivered, increased 134% to nearly $8.6 billion in the third quarter. That’s up from delivery bookings that increased 106% to $6.9 billion in the second quarter, and 52% to $4.7 billion in the first quarter. Uber makes money based on fees earned -- its “take rate” -- on its gross bookings. In the third quarter, its revenues increased 125%, to $1.45 billion.
Uber’s delivery business is benefiting from what CEO Dara Khosrowshahi called a massive structural shift in consumer behavior.
“Consumers are quickly becoming accustomed to the magic of having anything delivered to the door in half an hour, much like the magic of having a car show up in a few minutes,” Khosrowshahi told investors during the company’s third-quarter earnings call on Nov. 5. “It's my belief that the tailwinds behind this category are so strong that we can continue to deliver exceptional growth, while also improving profitability.”
Uber signaled its intent to become a bigger player in food delivery -- whether from restaurants or retailers -- earlier this year, when it launched its Grocery Delivery service in July. The company partnered with Santiago, Chile-based Cornershop, a company it agreed to acquire in 2019, to launch the delivery service in Latin American and Canadian cities.
More recently, Uber acquired the Postmates delivery platform in an all-stock deal valued at $2.65 billion, and it closed on the Cornershop and Postmates deals in the third quarter. In early October, Uber relaunched the Uber Eats app to integrate its global grocery delivery capabilities. Uber’s grocery delivery service is now available in the Americas and Australia, the United Kingdom, Japan, France, Taiwan, Canada, Chile and Brazil.
“Our grocery business now is combined between Cornershop and our delivery platform, at over $1 billion in run rate," Khosrowshahi said. "We expect that to be multiples of $1 billion next year. So we're leaning forward pretty strongly.”