Uber Taps SoftBank-Backed GoPuff to Expand Grocery Delivery

4/5/21

Bloomberg News

Uber Technologies Inc. will vastly expand grocery delivery in the U.S. this summer through a partnership with GoPuff, a fast-growing delivery startup and the owner of the liquor store chain BevMo!, the companies plan to announce Tuesday.

GoPuff will make inventory of convenience store and grocery items available to Uber customers in 95 cities starting next month and nationwide by the end of the summer, the companies said. GoPuff will handle logistics and delivery for the orders, and Uber will take a percentage of each transaction made through its app.

The coronavirus pandemic transformed Uber into a delivery company when demand abruptly shifted away from ride-hailing. Gross bookings from delivery more than doubled last year to $30.2 billion. Uber embraced the change by bolstering its food delivery business with the $2.65 billion acquisition of Postmates and by adding groceries and other goods, including alcohol with the purchase of another startup, Drizly.

Uber is set to report first-quarter financial results Wednesday, which will show signs of recovery for the rides business. Still, delivery remains a central part of the company’s future.

The volume of searches in Uber’s app for grocery and convenience store items grew 40% since the start of the year, said Raj Beri, the company’s head of grocery and new verticals delivery. The accord with GoPuff positions Uber to be more competitive with the likes of Amazon.com Inc. and Instacart Inc. on those products.

For GoPuff, it’s an opportunity to keep growing at a pace similar to Uber in its startup days. The two share a major common investor in SoftBank Group Corp. and a years-long tradition of operating unprofitably. (Both companies have said they have a path to turning that around.) Investors valued GoPuff at $8.9 billion in March, more than double what it was five months earlier.

The most-ordered items on GoPuff last week were toilet paper, White Claw hard seltzer and Tylenol, the startup said. The first locations where Uber will offer GoPuff inventory include Chicago, Houston and Miami.