Uber cites growth in retail/grocery delivery

Uber Technologies said its nascent partnership with Instacart is helping drive incremental restaurant deliveries, as the company’s own retail and grocery business continues to ramp up.

“We are very encouraged by the trends [with Instacart],” said Dara Khosrowshahi, CEO of Uber, in a conference call Tuesday with analysts discussing second-quarter results.

Referrals from the grocery-delivery specialist have been particularly strong in suburban markets where Instacart has a strong presence, he said, adding that the average basket size of orders originating on Instacart is 20% larger than native Uber Eats orders.

The partnership, through which Instacart is listing Uber Eats restaurant delivery options for its grocery customers, kicked off during the second quarter.

Khosrowshahi also said Uber’s own retail and grocery delivery business is growing, and that the business still has a “long, long runway” for additional growth as it seeks to sign on new retail partners and expand its customer base.

“We made great progress in grocery and retail by deepening our selection,” he said, noting that the number of active merchants on the platform was up 9% year-over-year.

Khosrowshahi also said the company has “a clear path to EBITDA profitability through improved unit economics” in retail/grocery delivery.

Related:Instacart eyes high-margin revenue growth via Uber Eats

Fifteen percent of Uber Eats customers are now also ordering grocery delivery, said Prashanth Mahendra-Rajah, chief financial officer, which represents a 200-basis point improvement from a year ago. Retention of grocery delivery customers is also improving, he said.

Another indicator of the success of the platform is that ad spending on Uber’s grocery and retail marketing network has more than tripled year-over year, Khosrowshahi said.

Among the new and expanded retail and grocery partnerships, Uber has expanded its relationship with Costco, which the company said is expected to help reach new suburban customers and drive basket sizes. Uber also recently added delivery from Save A Lot, The Vitamin Shoppe, and GNC, and expanded its partnership with Rite Aid to include alcohol delivery.

Uber reported 8% growth in revenues in its delivery business in the second quarter, compared with a year ago, to about $3.3 billion. The company’s overall revenues were up 16% in the quarter, to about $10.7 billion, and its net income more than doubled to just over $1 billion.

The positive results helped drive the company’s share price up 10% on Tuesday, contributing to a rebound after Monday’s sharp declines in the in market overall.

Related:Save A Lot now on Uber Eats