Latin America: the latest on Uber’s acquisition of Cornershop

Oliver Butterworth
Retail Analyst
@RetailAnalysis

Date : 05 October 2020

In October 2019, Uber announced it had reached an agreement to acquire a majority stake in Chilean grocery delivery start-up Cornershop, subject to regulatory approval (covered here). The move would enable Uber to extend its on-demand offer across the Americas to include grocery delivery.

Source: Cornershop

In July 2020 Uber Technologies unveiled that users in select Latin American and Canadian cities (since extended to the US) could order groceries through the Uber and Uber Eats apps, marking its first integrated grocery delivery experience.

Raj Beri, Uber’s Global Head of Grocery, commented “[this] product integration marks an important step in our partnership with the team at Cornershop to bring grocery delivery to millions of consumers on the Uber platform.”

The acquisition has received regulatory approval in Chile, but it remains unclear whether it has been approved by the COFECE (Mexico’s competition authority), which is the final component in the investment. 

Uber aims to be a major player in grocery delivery

Since the start of the pandemic, Uber’s taxi business has seen a decline in revenue, whereas the Uber Eats food delivery service has seen increased demand. The pandemic has no doubt accelerated Uber’s push into grocery delivery, as consumers continue to limit their travel, and many are working from home. 

Uber has been exploring and testing grocery delivery for several years, but now plans to rapidly expand this offer and make it a core part its business.

Beri states: “We're really looking at Uber Grocery as this global business, similar to Rides, similar to Eats, and we have fairly aggressive plans on a global scale. I think the acquisition of Cornershop, and that integration, which you've seen go live in a few markets and now globally, is the first phase of that.”

Solid partnership with market-leading potential

Cornershop launched in 2015, so has five years’ experience of delivering groceries across several markets: Chile, Mexico, Peru, Colombia, and Brazil. During this time, it has formed alliances with many of the region’s leading retailers.

Example of retail partners in Mexico

Source: Cornershop

Cornershop has also developed a best-in-class inventory management system, as well as pick-and-pack technology. Uber will use the technology and allow Cornershop to continue handling the picking, packing, and delivery. 

Source: Cornershop

Uber is no stranger to Latin America. Through its Uber Eats platform and Uber ride-hailing app, it has established a presence in all the region’s major markets. Uber also contributes its huge client base in the US, where the businesses are starting to expand. Oskar Hjertonsson, Founder and CEO of Cornershop, said “Uber is the perfect partner to bring on-demand groceries from incredible merchant partners at the touch of a button across the Americas.”

Uber will use its existing platforms to create a seamless experience for the customer i.e. they will be able to conveniently order grocery deliveries within the rides and Eats apps.

“I feel pretty good that our use case is actually very complementary to the use case that people are coming to Uber and Uber Eats for right now…When you think about consumers using Uber Eats for food delivery, that translates very well to grocery. It's not a huge leap”. Raj Beri.

Source: Uber

Uber and Cornershop launch first phase of grocery delivery

In July Uber added a dedicated grocery tab in the Uber and Uber Eats apps, which allows users to order from Cornershop’s grocery partners. The service is now available in 11 cities in Brazil, including Rio de Janeiro and São Paulo, four in Chile, Bogotá in Colombia, and Lima in Peru. This is in addition to Canada, Florida, and Texas.

Increased competition for Rappi

In Latin America, Cornershop faces strong competition from Rappi, which has had significant investment from Japan’s SoftBank Group. However, the partnership with Uber is likely to encourage more businesses to want to work with Cornershop/Uber to take advantage of Uber’s vast and global user base.

Rapid delivery food services in Latin America’s major markets

Source: IGD Research

Conditions of the pandemic create wider opportunity for grocery delivery services…

The pandemic has no doubt accelerated Uber’s push into grocery delivery, as consumers continue to limit their travel and time spent out of the home. In recent months Uber has invested heavily in this area and we anticipate it expanding into more cities and new markets over the next couple of years.

We have seen a shift in consumer behaviour with many migrating to online shopping. A large proportion of these customers are using online channels for the first time and technology has become less of a barrier for new users.

This creates a sizable opportunity for grocery deliverers. As many shoppers will be making less frequent and essential trips to the supermarket, they will increasingly use these services for top-up shops. If using delivery apps proves to be convenient and at no/low cost, they have the potential to retain customers in the post-pandemic world.

…and, for grocery retailers

Since the start of the pandemic a growing number of retailers have been looking to form partnerships with grocery deliverers. For some retailers, this has been to unlock delivery capabilities (which they did not have). For others it was to support the overwhelming and unprecedented demand for grocery delivery, which the retailers themselves could not fulfil.

This report provides insight on the evolution of last mile, rapid delivery services in Latin America. This includes both global businesses that have entered the region (e.g. Uber Eats and Glovo) and the extremely successful local players (such as Cornershop, iFood and Rappi).

In December 2019 Colombian retailer Grupo Éxito, part of the French Casino Group, opened its Carulla SmartMarket store concept in Bogotá, Colombia. This innovation lab, which is Colombia’s first smart supermarket, exhibits 30 pieces of innovative technology which enhance the customer experience.

See the latest industry news on Latin America.