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Chilean Grocery Startup To Be Acquired By Uber After A Failed Attempt By Walmart


10/12/2019


Chilean Grocery Startup To Be Acquired By Uber After A Failed Attempt By Walmart
The Santiago, Chile-based startup online grocer Cornershop will have a investment from Uber against a major stake in the company which will allow the United States based ride hailing firm to expand its geographic reach and possibly enhance its profits by offering rides with food delivery.
 
The deal pending regulatory approval is also good news for the Chilean online grocer as it would the uncertainty about its future. The company has the backing of Accel as well as other venture investors.
 
More than a year ago, the company was proposed to be bought entirely by US based retailing giant Walmart Inc. for $225 million and wanted to resell the company to Walmart’s Mexican subsidiary. But that move by Walmart was thwarted by Mexican regulators over concerns of market dominance and antitrust issues in June this year.
 
The largest online platform for food delivery in Mexico and Chile, Cornershop was unique because itr allowed its users to purchase products form a host of retailers including the likes of Costco Wholesale Corp., Petco Holdings Inc., Walmart, bakeries and pharmacies. The advantage of the app was that users could get all the products purchased from the different vendors delivered at once and the typical time frame of delivery is 90 minutes. In addition to the delivery charge, users were usually charged a higher price for the products purchased through the app. The four-year-old startup also operates in Peru and Canada.
 
The details of the deal were not available. 
 
This deal could be a significant one for Uber as it could strengthen its new strategy of including and bundling more profitable services over its basic ride haring business. Recent months have not gone well for Uber. Its share price has dropped by at least 30 per cent since its initial public offering earlier this year amidst attempts by its Chief Executive Officer Dara Khosrowshahi to reassure investors about the focus of the company on becoming profitable and yet continue to grow.
 
The attempt by Walmart to purchase outright Cornershop was seen by analysts as a strategy of the largest retailer of the world to expand its reach in the e-commerce segment because the Cornershop app was already an established one and would also additionally bring in a huge data base of users as well as insight about the purchasing habits of the consumers.
 
“It’s already positioned, it knows the market well and it was going to accelerate this process for Walmart,” said Marisol Huerta, an analyst at Banco Ve Por Mas. “It’s the same strategy for Uber.”
 
Huerta said that San Francisco-based Uber would be able to add on more offerings to its Eats app by the deal and the company would be able to not only deliver food from restaurants but also from a wide range of grocery stores and chains. “They’ll be entering a new market but they’ll already have a big data base and the structure to operate in it.”
 
“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 a statement announcing the deal.
 
(Source:www.bloomberg.com)


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