By Granth Vanaik
(Reuters) – Instacart customers will now be able to use the grocery delivery platform’s app to order from hundreds of thousands of Uber Eats restaurant partners across the U.S., as part of a partnership between the two companies, they said on Tuesday.
Instacart, formally known as Maplebear, has been investing to improve its platform services and increasing its marketing spend to attract more customers amid stiff competition from DoorDash, Amazon.com and Walmart.
Shares of Instacart were up 4% before the bell, while Uber Technologies was up marginally after the announcement. Shares of rival DoorDash, the top U.S. food delivery player, were down 2.3%.
“The new team will pose tough competition for some of the other food delivery companies like DoorDash, in what has already been a hyper competitive landscape,” said Art Hogan, chief market strategist at B. Riley Wealth.
Instacart said there would be a new tab on its app that would allow customers to choose from a selection of nearby restaurants, browse menus, place orders and track deliveries in real time.
Orders placed on its platform from restaurants would be delivered by Uber Eats and their workers, Instacart added.
“This new strategic partnership with Instacart will … drive more business for restaurants, and create more earnings opportunities for couriers,” said Uber CEO Dara Khosrowshahi.
Customers with Instacart Plus membership would also be able to get free delivery on both grocery and restaurant orders that are more than $35.
“DoorDash has a significant lead in restaurant delivery and its grocery business is growing. It’s no surprise that Instacart sees this as a threat and wants to woo its customers with a more comprehensive delivery offering,” said Emarketer analyst Blake Droesch.
Instacart and Uber are both set to report their first-quarter results on Wednesday.
(Reporting by Granth Vanaik in Bengaluru; Editing by Shilpi Majumdar)
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