Uber Launches Grocery Delivery in Latin America & Canada

Uber Technologies, Inc. UBER is launching grocery-delivery services in some Latin American and Canadian cities as demand for grocery deliveries surges amid the coronavirus pandemic. The company has witnessed a 176% rise in grocery orders since February.

Uber has partnered with Cornershop, a Chilean grocery-delivery startup, for the services. We remind investors that last year Uber had entered into an agreement to acquire a majority stake in Cornershop. The transaction is expected to close in a few days upon regulatory approval in Chile. The grocery-delivery service marks Uber’s first product integration with Cornershop.

The service, expected to be rolled out in the United States later this month, can be availed of through the Uber and Uber Eats apps. Orders placed on the apps will be facilitated and delivered by Cornershop team members. Similar to other services on Uber, customers can track the status of their orders.

After initially launching the services in some cities in Brazil, Chile, Colombia, Peru and Canada, Uber plans to extend the same to the rest of the world later this year.

While coronavirus has led to a downturn in Uber’s core ride-hailing business (first-quarter gross bookings declined 5% year over year for the first time ever), the same is causing a surge in its food-delivery business — Uber Eats — as people prefer to stay home and order food online. Gross bookings from Eats augmented 52% year over year in the first quarter of 2020, while revenues from the unit jumped 53%. Moreover, the company revealed that second-quarter bookings on Uber Eats have soared more than 100% year over year.

Given the slump in demand in rides business, Uber’s move to bolster its delivery business is laudable. To this end, the company recently entered into a definitive agreement to acquire Postmates, its smaller rival in the food delivery business. Subject to approval, the transaction is expected to close in the first quarter of 2021. The Postmates deal follows Uber’s failed attempt to acquire Grubhub GRUB, which is now set to be purchased by Just Eat Takeaway.com.

Zacks Rank & Key Picks

Uber carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Internet - Services industry are CooTek Cayman Inc CTK and Tencent Holding Ltd TCEHY, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While CooTek Cayman has an impressive earnings history having outperformed the Zacks Consensus Estimate in three of the past four quarters, shares of Tencent have surged more than 47% in a year’s time.

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