CHILE – Uber Technologies has announced that it has agreed to acquire a majority stake in a Latin American online grocery provider Cornershop which has operation in Mexico, Chile and Peru.
Details of the agreement were not disclosed, but Uber said the deal is expected to be completed early 2020. The grocery service will maintain its leadership and report to a board with majority Uber representation.
Founded in 2015, Cornershop operates online grocery delivery business in Latin American countries and has also expanded its operation to Canada.
Oskar Hjertonsson, founder and CEO of Cornershop, said that the acquisition will accelerate the company’s ambitions of bringing its services to more markets around the world.
“Uber is the perfect partner as we embark on our quest to bring our unique flavor of on-demand groceries from incredible retail partners to many more countries around the world,” Mr. Hjertonsson said in the statement.
“We’re excited to partner with the team at Cornershop to scale their vision, and look forward to working with them to bring grocery delivery to millions of consumers on the Uber platform,” Dara Khosrowshahi, Uber’s chief executive added.
The acquisition of Corneshop could help strengthen Uber’s revenue in Latin America, which saw a 24% dip between the second quarter of 2018 and 2019 while revenue from its other regional segments increased.
Uber has been facing major competition from players in the sector including Lyft and Walmart Inc – which agreed last year to buy Cornershop for US$225 million, but Mexican regulators blocked the deal.
Uber is now seeking to build its food delivery businesses in its efforts to turn the Uber Eats business into profitability especially at a time when the global online food delivery business is projected to hit US$200 billion by 2025.
“Whether it’s getting a ride, ordering food from your favorite restaurant, or soon, getting groceries delivered, we want Uber to be the operating system for your everyday life,” Khosrowshahi said in the announcement.
However, Uber has been losing millions through investments aimed at expanding Uber Eats, largely because it is subsidizing the costs of the service to gain market share and fend off many competitors, such as DoorDash and GrubHub.
As the company continues to expand in the sector, it still remains unclear how the strategy will work for Uber’s grocery delivery goals as competition in the sector continues to intensify across various markets.
In the United States, the competition will include Instacart, a start-up backed by blue-chip Silicon Valley venture firms, as well as Amazon, which gained an enormous footprint in groceries with its acquisition of Whole Foods in 2017.