Uber Expands Its Same-Day Delivery Service: 'It’s No Longer an Experiment'

Local delivery is one of the most crowded spaces in tech right now, and ride-hailing giant Uber wants a piece of it.

At long last, the company is introducing a fleshed-out same-day delivery program for brick-and-mortar businesses under the name “UberRush.” Uber has already started testing this in New York City and is now expanding the pilot to San Francisco and Chicago. The price of delivery will range from $5 to $7.

“It’s no longer an experiment … It’s a business for us,” said Jason Droege, who runs UberEverything, the part of the company that tests new initiatives outside of the ride-hailing business. “When it’s a business, you’re worried about the profit and loss.”

Participating businesses can either sign up for the program directly with Uber or access the service through e-commerce software tools such as Shopify and Bigcommerce, as Re/code previously reported. Other launch partners include Delivery.com, food service ChowNow, florist service BloomNet and digital cash register service Clover.

Uber said it is targeting smaller, local retailers and restaurants with this offering, not bigger brands like Target or Nordstrom. Uber has had a hard time signing up big-name retailers for delivery partnerships, according to sources.

The company has dabbled with offering services outside of shuttling passengers around, such as its quick food delivery program UberEats, which has a limited menu from a different merchant every day. But UberRush is Uber’s first big foray into putting its huge network of drivers to uses other than ferrying passengers. CEO Travis Kalanick has dreamed of doing this for years and sees delivery, among all things, as a logical next step.

Uber’s success is far from assured, though — there are tons of competitors, and delivering food and packages is an entirely different endeavor from delivering people. Food can get cold; parcels don’t meet you at the curb.

Rivals have had a solid head start. The startup Deliv, backed by several sizeable mall companies, powers same-day delivery for big retailers like Macy’s and Kohl’s behind the scenes. Likewise, Postmates, used by Starbucks and Apple, is expanding its API program to let retailers use it for delivery without having to put their own products on the Postmates consumer app. Sidecar, too, handles local delivery on the back end for some merchants.

For merchants that use software providers like Shopify, the Uber same-day delivery button will appear as an option to customers when they’re checking out — but only if the delivery address is within the vicinity of the merchant. Brennan Loh, head of product partnerships at Shopify, said that one in 12 orders on the platform is within 20 miles of the actual merchant.

Shopify has already started testing Uber delivery in New York with retailers like clothing boutique Sam and Lex. Other merchants in New York, like burrito restaurant Blockheads and healthy food spot Indie Fresh, have been dealing directly with Uber to power their deliveries.

Uber will take a 25 percent cut of the delivery fee in San Francisco and Chicago, which is calculated based on distance, and 20 percent of the delivery fee in New York. The rest of the fee is given to the courier.

Uber’s previous delivery experiments ran the gamut, from its UberEssentials test in D.C., delivering local market goods like toothpaste and cleaning supplies (it eventually shut down), to the original UberRush, which let individuals order couriers in New York.

Surprisingly, in Uber’s new and revamped UberRush, it no longer deals directly with consumers as it does with its car-hailing service and its app. Customers won’t go to the Uber app to order from local merchants — they’ll go through the merchants’ websites, apps or by phone.

By serving retailers behind the scenes, Uber is hoping to woo new clients that would rather not turn over their customer base to Uber.

It is also betting that undercutting its delivery rivals on cost will help attract new business. Droege said, “We have the most cars on the road, we have the most efficient network, so we can offer the lower price.” Tuesday, Postmates stole a bit of Uber’s thunder by setting its lowest delivery fee at $2.50, whereas the ride-hailing company’s local merchant delivery starts at $5.

Uber has had many conversations with bigger retailers about doing their delivery, but Starbucks rejected its bid — choosing to partner with Postmates instead — and companies like Gilt that experimented with Uber delivery had bad experiences, according to Wall Street Journal sources.

Re/code previously reported that Uber planned to announce delivery deals with some mainstream fashion brands, too. It’s not clear whether those deals fell apart or will be announced later. Uber declined to comment.

This article originally appeared on Recode.net.

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