Uber Eats Partners With FastAF on Ultrafast Delivery Despite Warning Signs

Apparently ignoring the writing on the wall, Uber is entering into ultrafast delivery.

On-demand delivery eTailer FastAF Technologies announced in a Tuesday (Feb. 1) press release a partnership with Uber Eats to launch 25-minute delivery through Eats’ marketplace in New York City, Los Angeles and San Francisco. Offerings available through this collaboration include grocery items, personal care products and other retail goods.

“We are thrilled to partner with Uber Eats to bring to their customers access to our curated selection of products and increase the assortment available to them in 25 minutes,” FastAF CEO and Founder Lee Hnetinka said in the release. “More than 50% of our products are exclusive to FastAF, and partnering with Uber Eats gives their customers an unmatched assortment while expanding the reach of our selection.”

The news comes at a time when ultrafast grocers’ struggles to make it in the difficult United States market are being spotlighted. A report Monday (Jan. 31) revealed that these services can lose as much as $20 on average per order, and another article stated that multinational ultrafast grocery delivery startup Jokr is looking to sell its New York City business.

Read more: Ultrafast Grocers’ Losses Mount in the Face of an Uncertain Future

See also: Jokr’s Intention to Sell NYC Biz Reveal US Consumers May Not Be Ready for Ultrafast Grocery

Additionally, the announcement comes just over a week after Uber announced Jan. 25 the addition of hundreds of new grocery locations in California, part of the company’s broader effort to grow its grocery offerings. After all, on-demand delivery services that can become consumers’ go-to not only for restaurant meals but also for grocery items have the opportunity to build deeper loyalty, driving up purchasing frequency.

“In the U.S., because of the power of the platform, we can, over a long period of time, flip over, especially our members from delivering, from eating with us, from moving with us and then getting grocery delivered with us as well,” Uber CEO Dara Khosrowshahi told analysts on a call in November. “So, we think it’s a huge opportunity. The grocery market is, these are multibillion/trillion [total addressable markets (TAMs)].”

In the U.S., penetration for online grocery remains low, according to research from PYMNTS’ January study “Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022,” created in collaboration with Toshiba Global Commerce Solutions in the late fall.

The study, which drew from a census-balanced survey of more than 2,000 U.S. consumers about their grocery and pharmacy shopping preferences, found that just 18% of consumers most frequently make grocery purchases digitally. Additionally, only 20% of those surveyed reported that the option to have items delivered would improve their loyalty to their grocery store.

Get the report: The Customer Loyalty to Merchants Survey 2022

With this relatively low demand and with the very high cost of fulfilling delivery orders within a matter of minutes, it is uncertain as to whether the market can yet sustain offerings such as those promised by this new Uber Eats initiative.