Is Uber/Postmates a bigger deal for restaurant or grocery delivery?
Uber’s move to acquire Postmates is predicted to help the company grab market share in restaurant delivery and significantly expand its capacity to deliver groceries and other staples.
The $2.65 billion deal, expected to close in the first quarter of 2021, comes at a time when demand for restaurant and grocery delivery has surged and Uber’s ride-sharing services have plunged with Americans marooned in their households due to the pandemic. Consolidation among on-demand delivery companies has also been expected.
In food delivery, the combined Uber/PostMates would control 37 percent of the U.S. market, behind DoorDash’s 45 percent, according to Edison Trends. GrubHub, which also owns Seamless, falls to third among major players.
Uber will gain major traction in Los Angeles, Miami and Phoenix, but still lag in key markets, including Chicago, New York and San Francisco.
“It’s a big enough market, and there is room for three players to be profitable and to do very well,” Uber CEO Dara Khosrowshahi, told investors. The consumer-facing Postmates app will run separately while “supported by a more efficient, combined merchant and delivery network.”
Uber also gains Postmates’ “delivery-as-a-service” platform that is being offered in several cities and also includes delivery partnerships with Walgreens and 7-Eleven.
Uber launched an option to send packages via its U.S. ride-hail drivers during the pandemic and is offering on-demand delivery with grocers in several countries, including with France’s Carrefour. It’s also finalizing gaining majority control of Latin American grocery delivery service Cornershop, with plans to expand Cornershop in the U.S.
“The vision for us is to become an everyday service,” said Mr. Khosrowshahi, pointing to opportunities in grocery and pharmacy delivery beyond meals. He noted that Uber Eats and its restaurant delivery competitors “are all looking to get into adjacent categories and really looking to power local commerce and delivery to the home.”
He admitted, “This is a business that Amazon is in. This is a business that Walmart is in. I do think that the category and the markets are going to start overlapping with a lot of players — the TAMs here, the total addressable markets, are huge.”
- Uber to Acquire Postmates – Uber
- Uber Unveils Grocery Delivery – Uber
- Uber Postmates Transaction Analyst Call Transcript – Uber
- Uber to Buy Postmates for $2.65 Billion in Stock – The Wall Street Journal
- Uber strikes deal to buy Postmates for $2.65bn – Financial Times
- Uber moves into delivery business as it eyes Amazon – Financial Times
- Uber scoops up Postmates for $2.65 billion in ‘everyday’ delivery push – Reuters
- Would an Uber/GrubHub merger be good for restaurant meal delivery? – RetailWire
- Uber plans to deliver everything – RetailWire
DISCUSSION QUESTIONS: Is Uber’s acquisition of Postmates a bigger game changer for restaurant or grocery delivery? How would you assess the challenge and opportunities Uber faces in both delivery areas?