Dive Brief:
- Uber Eats is launching an "everyday essentials" online shop powered by Gopuff nationwide this summer, according to an announcement from the companies.
- The white-label shop will offer most of Gopuff's product categories, with the convenience retailer's dark store network and drivers fulfilling orders. The collaboration will launch in more than 95 cities in June and expand nationwide in the summer.
- The deal is a first for both companies — the first time Uber has partnered with a vertically integrated delivery business, and Gopuff's first white-label offering for another company — and underscores the growing focus on convenience delivery.
Dive Insight:
Uber and Gopuff are linking arms in an effort to expand their reach with consumers and challenge entrenched online competitors like Instacart.
The companies have complementary needs and capabilities. Uber, which launched a grocery delivery service last summer that's now available in 20 major U.S. metropolitan areas, is looking to increase the number of locations where it can ferry more than just riders and restaurant food.
Gopuff, meanwhile, has the infrastructure to deliver across more than 650 U.S. cities and wants to increase the business flowing through its more than 250 small dark stores. In the announcement, Gopuff said it increased its number of "micro-fulfillment spaces" by 80% last year. It also operates more than 160 BevMo locations it acquired last year.
The new Uber Eats offering will feature snacks, pantry items, over-the-counter medication, alcohol, cleaning supplies and other everyday essentials. Uber Pass and Eats Pass members will get free delivery on orders over $15. Gopuff says orders typically take between 20 and 40 minutes to deliver.
The online shop underscores the growing power of third-party apps. Uber has traditionally plugged into restaurants' and grocers' online platforms as a service provider, while Instacart has done the same and also offers white-label services to power retailers' online shops. But the essentials shop is another case of a delivery app offering its own branded online storefront — the other being DoorDash's DashMart, which launched last summer and is now available in numerous cities.
Raj Beri, Uber's head of grocery and new verticals delivery, said in an interview last year that the company is targeting "top-up" as well as stock-up grocery trips and that it aims to make its Uber app a one-stop shop for delivery of all sorts of goods and services. In Tuesday's announcement, he noted searches for grocery and convenience products have increased 40% since the start of the year.
Last week, Uber said it's adding a feature allowing ride-share customers to order and pick up meals and groceries while en route to their destination. In February, Uber agreed to purchase alcohol delivery startup Drizly in a $1.1 billion deal, noting at the time that it planned to eventually integrate Drizly into the Uber Eats app.
Gopuff is scaling rapidly on the back of $1.15 billion in funding it received earlier this year. This includes adding experienced e-commerce veterans to its ranks — most notably Tim Collins, former vice president of global logistics with Amazon, who is now Gopuff's senior vice president of operations.
Gary Hawkins, founder and CEO of the Center for Advancing Retail & Technology, believes many other digitally native companies in food retail will link up in the months and years ahead, challenging conventional grocers.
"Gopuff, by default, is digitally engaged with every one of their customers. Uber the same thing ... each of these companies is growing value by leveraging their digital networks, connecting them to other digital networks and growing revenue," Hawkins wrote in an email. "Traditional retailers have massive customer bases but the vast majority of shoppers are not strongly digitally engaged. This is the danger and the opportunity."
