Uber reaches deal to acquire majority stake in grocery delivery app Cornershop

Date : 16 October 2019

Uber has announced its acquisition of Cornershop, a grocery delivery app founded in Santiago, Chile and launched in 2015. An undisclosed fee has been agreed, however the deal is subject to regulatory approval. If it does go ahead the transaction is expected to close early 2020.

Cornershop acquisition by Walmart previously rejected

Walmex (Walmart Mexico) previously tried to acquire the Cornershop business for around US$225m back in September 2018. This was rejected by the Mexican regulator COFECE (the Federal Commission of Economic Competition) in June 2019 as the move had the potential of being anti-competitive.

The regulator said the acquisition could allow Cornershop to refuse service to Walmart’s competitors, or Walmart could refuse to sell its products on platforms operated by Cornershop’s competitors. Uber is perhaps less likely to be rejected as it is not affiliated with any one retailer, i.e. it is likely to fulfil grocery orders by using a multitude of retailers.

Uber sees the potential grocery delivery has in growing the business

Uber will maintain its heavy investment in the Uber Eats arm of its business and sees this as an area with high-growth potential. The businesses acknowledge that one way it could grow this area further is to extend its current offer of last mile delivery from restaurant and fast-food chains to cover grocery delivery.

Cornershop has built strong foundations in Latin America, currently offering grocery delivery in Chile, Mexico and Peru. Most recently, the service was extended into Toronto, Canada.

Example of how the Cornershop/Uber app could look in the future

 

Source: Linkedin, Felix Lulion, CEO of Cornershop Canada

How could Uber best utilise this acquisition?

The Cornershop app has so far been a big success in Latin America. This provides Uber with a great foundation to build upon and potentially extend into new markets in Latin America and beyond. Uber has said if it successfully acquires the business it will keep the existing structure Cornershop has in place. It is therefore likely to leverage Cornershop’s experience, whilst contributing its own learnings and delivery infrastructure from Uber Eats.

In the mid-term, extending its reach in Latin America and Canada would seem like an obvious starting point for the business. However, this could mean competing with other established third parties such as Rappi, who currently dominate the sector in some Latin American markets.

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