Instacart and Uber Eats Stateside food and grocery delivery tie up is much ado about nothing. Here's why
ICYMI, Instacart and Uber Technologies yesterday announced a partnership to bring Uber Eats restaurant delivery to Instacart customers.
In the coming weeks, the latter’s customers across the US will be able to use its app to order from hundreds of thousands of restaurants, powered by Uber Eats.
This will be featured through a new “Restaurants” tab in the Instacart app, providing interface that allows consumers to choose from a selection of nearby restaurants, browse menus, place orders, and track deliveries in real-time.
Customers will be able to order groceries for the week from Instacart’s more than 1,500 national, regional, and local retail banners across more than 85,000 stores as well as dinner for the night from various restaurants, with the latter being fulfilled by Uber Eats and the couriers on its platform.
Instacart+ members will also get $0 delivery on grocery and restaurant orders over $35.
“Our goal is to make it effortless for people to go anywhere and get anything,” says Dara Khosrowshahi, CEO at Uber.
“We’re excited that this new strategic partnership with Instacart will bring the magic of Uber Eats to even more consumers, drive more business for restaurants, and create more earnings opportunities for couriers.”
“Through this partnership, Instacart customers now have access to both the best online grocery selection in the US and restaurant delivery, making it even easier for them to conveniently tackle all their food needs from a single app,” says Fidji Simo, CEO and Chair at Instacart.
“Whether it’s ingredients for a beloved family recipe, a prepared meal from a nearby grocer or takeout from a favourite restaurant - customers can now get the food they want, from the retailers and restaurants they love, all within the Instacart app.”
Not everyone is quite so enthused by this tie up, however.
In a LinkedIn post, Brittain Ladd, a supply chain consultant and former Amazon executive, said: “This isn’t a partnership. This is much ado about nothing.”
“Uber and Instacart believe the deal will bring more customers to Uber Eats and a new revenue source for Instacart, which will receive a fee from Uber for every restaurant order.”
“However, here’s where the “partnership” falls apart and becomes a very standard and boring agreement that will have no material impact of any kind for Uber or Instacart.”
“The companies said they won’t share drivers. Instacart will continue to fulfill grocery orders, while restaurant orders will be handled by Uber Eats even if they are received through the Instacart app.”
He added: “Get it? There is no partnership. Instacart is putting Uber Eats icon on its app. That’s it.”
“This is a typical Instacart “look at us, we’re brilliant” agreement that honestly means nothing. Its customers rarely order restaurant delivery at the same time they order groceries. They gain nothing by ordering from Uber Eats using Instacart’s app vs. using the Uber app.”
“In addition, the majority of Instacart’s customers in the suburbs prefer to order from DoorDash, not Uber Eats. This so-called partnership will not cause Instacart customers to switch from DoorDash to Uber Eats.”
“DoorDash has the leading share in the US restaurant-delivery market, ahead of Uber Eats. DoorDash is taking market share in grocery delivery from Instacart.”
Instead of this being a legitimate business partnership, Ladd argues, this is a press release to try and convince analysts that Instacart and Uber Eats are “thinking big” and being innovative.
Instacart likes doing things like this before they report their earnings, he states, noting that both companies report their earnings today.
Ladd concluded: “What this partnership is honestly about is that Uber Eats is waving the white flag. They know they can’t beat DoorDash on their own, and they need all the help they can get. DoorDash controls nearly 70% of the restaurant delivery industry.”
“Should Uber and Instacart merge? It would certainly benefit Uber Eats, and it’s possible that Uber will acquire Instacart. Note: Instacart has tried to convince Uber and DoorDash to acquire them on multiple occasions; most recently before they went public.”
“PepsiCo, a combined Kroger Albertsons, Amazon, Target, or the Ocado Group, could acquire Instacart.”
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