Uber and Gopuff join forces on the “everyday essentials” e-shop

Diving brief:

• Uber Eats launches nationwide “everyday essentials” online store powered by Gopuff this summer, according to an announcement companies.
• The white-label store will carry most product categories from Gopuff, the convenience retailer’s network of dark stores and drivers fulfilling orders. The collaboration will launch in more than 95 cities in June and expand nationwide this summer.
• The deal is a first for both companies — the first time Uber has partnered with a vertically integrated delivery business and Gopuff’s first white-label offering for another company — and underscores the growing focus on local delivery.

Overview of the dive:

Uber and Gopuff are teaming up to expand their reach with consumers and challenge well-established online competitors like Instacart.

Businesses have complementary needs and capabilities. Uber, who launched a grocery delivery service Last Summer, which is now available in 20 major US metropolitan areas, is looking to expand the number of places it can carry more than just passengers and restaurant food.

Gopuff, meanwhile, has the infrastructure to deliver to more than 650 U.S. cities and wants to increase the volume of business going through its more than 250 small, dark stores. In the announcement, Gopuff said it grew its number of “micro-achievement spaces” by 80% in the past year. This too operates over 160 BevMo locations he acquired last year.

The new Uber Eats offering will include snacks, pantry items, over-the-counter medications, alcohol, cleaning supplies and other necessities. Uber Pass and Eats Pass members will get free shipping on orders over $15. Gopuff says orders typically take between 20 and 40 minutes to deliver.

The online store highlights the growing power of third-party apps. Uber has traditionally plugged into restaurant and grocer online platforms as a service provider, while Instacart has done the same and also offers white-label services to power retailers’ online stores. But the essentials store is another delivery use case offering its own branded online storefront – the other being DoorDash’s DashMart, which launched last summer and is now available in many cities.

Raj Beri, Head of Grocery and New Vertical Market Delivery at Uber, said in an interview last year that the company is targeting “top-ups” as well as grocery shopping and that it aims to make its Uber app a one-stop-shop for delivering all kinds of goods and services. In Tuesday’s announcement, he noted that searches for groceries and convenience products are up 40% year-to-date.

Last week, Uber said it was adding a feature allowing rideshare customers to order and pick up meals and groceries en route to their destination. In February, Uber agreed to buy alcohol delivery startup Drizly in a $1.1 billion deal, noting at the time that it planned to eventually integrate Drizly into the Uber Eats app.

Gopuff is moving fast on the back of $1.15 billion in funding he received earlier this year. This includes adding experienced e-commerce veterans to its ranks – including Tim Collins, former vice president of global logistics at Amazon, who is now Gopuff Senior Vice President of Operations.

Gary Hawkin, founder and CEO of the Center for Advancing Retail & Technology, believes many more digital native food retail companies will join in the months and years to come, challenging conventional grocers.

“Gopuff, by default, is digitally engaged with each of its customers. Uber the same…ach of these businesses increases value by leveraging their digital networks, connecting them to other digital networks, and increasing their revenue,” Hawkins wrote in an email. “Traditional retailers have massive customer bases, but the vast majority of shoppers are not heavily digitally engaged. It is the danger and the opportunity.“