May 7, 2024 - Business

Why longtime rivals Uber Eats and Instacart are teaming up

Illustration of a food delivery bag, with a dollar stapled to it instead of a receipt.

Illustration: Brendan Lynch/Axios

Uber Eats will be available on grocery delivery service Instacart in a head-turning deal that could pave the way for further collaboration between the erstwhile rivals.

Why it matters: The partnership comes amid heightened competition for food and grocery delivery, with giants like Amazon, Walmart, Target and DoorDash jockeying for market share.

Between the lines: Instacart is adding a "Restaurants" tab in the coming weeks — and it'll be serviced by Uber Eats drivers, who deliver food from hundreds of thousands of restaurants.

  • Instacart+ members won't pay delivery fees on Uber Eats restaurant orders above $35.
  • "Uber will pay Instacart an affiliate fee for every order that [the] company passes on to it," Bloomberg reported, citing Instacart CEO Fidji Simo.

The intrigue: Uber Eats also provides grocery delivery.

  • "Instacart and Uber seem to be going from adversaries to partners — and the first thing I'm curious about is what this means for Uber's ambitions in the grocery delivery space," CFRA Research analyst Arun Sundaram tells Axios. "Are they really conceding to Instacart?"

Uber CEO Dara Khosrowshahi told Bloomberg that the company expects that both companies "can continue to grow their business" independently but that together they can pose an even greater "threat to DoorDash."

Zoom out: The grocery and food delivery wars have been heating up with Amazon, Walmart and Target adding speedy new grocery delivery services, Axios' Kelly Tyko reported.

What we're watching: Are Uber and Instacart poised for a more comprehensive deal — even an merger?

  • Khosrowshahi told Bloomberg an acquisition is "not on the cards right now."
  • But CFRA analyst Sundaram speculated "this could be the initial stage of a potential acquisition at some point from Uber. It seems like they are testing it out right now."
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