Uber Eats wants a piece of the expanding ultra-fast delivery space
Uber Eats wants to play in the emerging rapid grocery delivery space through partnerships.
In February, Uber Eats and FastAF partnered to bring 25-minute delivery player to three US cities.
Uber also began piloting a dark store operation, Uber Mart, in Japan and Taiwan.
So for this year, VC firms have invested $21.1 billion in food and grocery delivery startups that include emerging rapid delivery players like Jokr, Buyk, and Gorillas, according to CB Insights, nearly all of whom promise to deliver in as little as 15 minutes.
But despite "noise" in the crowded space, Uber Eats executives say they want a piece of the expanding ultra-fast delivery sector.
"We need to be in that space," Yadavan Mahendraraj, head of merchant operations at Uber Eats, said during a third-party delivery panel discussion at the Food on Demand conference held in November in Las Vegas.
Raj Beri, global head of grocery and new verticals, told Insider during the conference that Uber Eats will get a foothold into the rapid delivery sector through strategic alliances with fast delivery players.
In 2021, Uber Eats partnered with instant needs delivery unicorn Gopuff in the US and French grocery chain Carrefour and ultrafast startup Cajoo to offer fast delivery in Paris.
In February 2022, Uber Eats announced another ultrafast partnership with San Francisco-based FastAF Technologies. The rapid delivery startup, which sells everything from groceries to AirPods, offers 25-minute delivery in New York City, Los Angeles and San Francisco.
"We're intentionally taking a partner approach," Uber CEO Dara Khosrowshahi told investors during its February 9 conference call.
Uber Eats grocery executive Raj Beri, far left, speaks at the Food on Demand conference with Kitchen United and Kroger executives.
Uber Eats told Insider that the company is taking a highly localized approach, country by country, to find the right ways to reach consumers quickly and reliably.
When asked about the huge amount of funding flowing into the instant grocery delivery sector, Mahendraraj said: "We're familiar with being in a market where there's a lot of money being poured in. And, so for sure, there is an element of where there is quite a bit of spending early on."
While he believes VC investment will "probably" subside in three years, Mahendraraj said, for now, instant delivery is "clearly a use case that exists for consumers."
"Are we looking at that space? Absolutely," Mahendraraj said. "Are we also realizing there's a lot of movement, so we need to cut through the noise? Yes, absolutely."
That's why Uber Eats is testing the waters with Gopuff, as part of its overall strategy to substantially invest in the global grocery market.
"We believe in this opportunity," Mahendraraj said of the overall on-demand grocery sector. "We can see that there's consumer demand and want to meet consumers where they need to be met."
Uber's grocery and new delivery verticals are a $3 billion business that covers about 400 cities.
Uber Eats and its main US rival DoorDash offer grocery and convenience store deliveries from merchants like Albertsons, 7-Eleven, and Walgreens. At the end of the year, Uber Eats began piloting owned-and-operated dark stores in Japan and Taiwan. Dubbed Uber Mart, the platform is meant to meet consumer demand for faster delivery of grocery and convenience items with delivery fulfilled by Uber Eats couriers in the countries.
But both delivery providers don't market those grocery services as rapid delivery.
"We don't offer a guarantee," Beri told Insider during the conference, referring to delivery in under 30 minutes.
But with Gopuff and FastAF as new partners, Uber Eats can play in the ultra-fast grocery delivery space in the US.
