Uber’s Acquisition of Cornershop: A Strategic Move in the Online Grocery Sector
In early 2019, Walmart’s attempt to acquire Chilean app Cornershop fell through due to antitrust authorities blocking the deal in Mexico. Now, it’s Uber’s turn to make a move in the online grocery sector by acquiring a majority stake in Cornershop. After receiving unconditional approval from Chile’s National Economic Prosecutor’s Office (FNE), Uber is waiting for regulatory approvals in Mexico to finalize the acquisition. This strategic move aims to bolster Uber’s presence in the supermarket e-commerce sector and meet the growing demand for online grocery delivery services.
Regulatory Approval and Competition Considerations
One of the main concerns for regulators was the potential elimination of a competitor in the market. However, the FNE dismissed this risk, stating that supermarkets are already investing heavily in e-commerce, which strengthens the overall development of the sector. The FNE concluded that the deal does not substantially reduce competition or negatively impact access, price, quantity, or quality of last-mile service platforms in supermarkets and other markets in Chile.
In Mexico, Uber and Cornershop are still awaiting approval from the Federal Economic Competition Commission (COFECE). While there is a possibility of COFECE conducting a thorough assessment of the acquisition’s impact on competition, analysts believe the chances of rejection are minimal since Uber doesn’t currently have a significant market share in the retail store sector.
Impact of COVID-19 on Uber’s Strategy
Due to the COVID-19 pandemic, Uber faced challenges with its ride-hailing service in several Latin American countries. As a result, the company had to shift its focus and strengthen its Uber Eats service. This strategic decision paid off, as the Uber Eats division contributed significantly to the company’s revenue in the first quarter of 2020, generating 14 percent more revenue than the same period in 2019.
Uber’s acquisition of Cornershop represents a strategic move to tap into the growing online grocery sector. Despite the previous setback with Walmart, Uber is on track to finalize the deal and leverage Cornershop’s expertise in this space. The regulatory approvals in Chile and Mexico are expected to be granted, considering the minimal impact on competition and Uber’s limited presence in the retail store market. As the COVID-19 pandemic shifts consumer behavior towards online grocery shopping, this acquisition positions Uber to capitalize on the demand for convenient and efficient last-mile delivery services.
Frequently Asked Questions
Question: What was the reason behind Walmart’s failed acquisition of Cornershop?
Answer: Walmart’s acquisition of Cornershop was blocked by antitrust authorities in Mexico due to concerns about eliminating a potential competitor in the market.
Question: What are the chances of COFECE rejecting Uber’s acquisition of Cornershop?
Answer: Analysts believe the chances of rejection from COFECE are minimal since Uber currently has a limited market share in the retail store sector.
Question: How has COVID-19 affected Uber’s strategy in Latin America?
Answer: The COVID-19 pandemic forced Uber to focus more on its Uber Eats service as ride-hailing faced challenges. Uber Eats has contributed significantly to the company’s revenue during this period.