Uber Eats Bets It Can Succeed Where Fast Grocers Failed

Uber Eats, FastAF Team on Ultrafast Delivery

Uber Eats may be able to succeed in the quick commerce space where ultrafast grocery startups failed. The aggregator announced Tuesday (Oc. 18) its first such initiative in the United Kingdom under the name Uber Eats Market, in partnership with British supermarket chain Iceland Foods.

“This partnership with Iceland is another way that Uber Eats is becoming the partner of choice for retailers in the U.K.,” Alex Troughton, head of commerce at Uber Eats U.K., said in an emailed press release. “We know we have the best technology, and we are delighted that we are able to work with Iceland on this new concept, Uber Eats Market, which will enable customers to order all the groceries they need in a matter of minutes.”

The partnership promises delivery of more than 1,000 products “in as little as 20 minutes,” including fresh foods, packaged goods, daily essentials and more. The supermarket chain’s staff will assemble the orders from its stores, and Uber will handle the delivery. The partnership centers on stores in densely populated neighborhoods, beginning with select locations in London.

“The speed at which we will be able to deliver customers’ shopping to their doors will be unrivalled, and we’re looking forward to seeing this partnership develop,” Justin Addison, international and wholesale director at Iceland Foods, said in a statement.

The move comes on the heels of turmoil in the ultrafast grocery space. Certainly, startups therein have had a rough go of it throughout this year, as many had predicted even while the category was booming in 2021. With the high costs of building out a network of warehouses, attracting and retaining drivers and acquiring customers, the economics of the model have proven difficult, often prohibitively so.

Read more: Inflation Slows Ultrafast Grocers’ Ambitions

Many players have either shut down completely and been stripped for parts or had to pull out of major markets and scale back their intentions, laying off staff by the hundreds or thousands. Plus, investor funding for the category has dried up considerably.

See more: The Quick Seems Dead as Ultrafast Grocers Retreat En Masse

However, Uber is coming at the space from a different angle. Rather than establishing a network of drivers and acquiring customers from scratch, the mobility and delivery giant is rolling out this capability as an incremental addition to its business. With the company’s global scale and existing infrastructure, Uber can sidestep many of the pitfalls of the short-lived ultrafast startups.

Moreover, ultrafast grocery may have a better go of it in the U.K. than in the United States, given the rate of online grocery penetration in each country. Research from PYMNTS’ 2021 study “What U.K. Consumers Expect From Their Grocery Shopping Experiences,” created in collaboration with ACI Worldwide, which drew from a survey of more than 2,500 U.K. adults about their omnichannel grocery purchasing preferences, found that nearly twice as large a share of U.K. grocery shoppers as U.S. shoppers favor eCommerce channels. Additionally, the same study found that U.K. shoppers are more than three times as likely to favor delivery options.