bigbuffalomegaways| Instacart and Uber teamed up to directly target DoorDash(DASH.US) hinterland distribution market is undergoing tremendous changes?

Instacart (CARTBigbuffalomegawaysUs) has established a partnership with Uber (UBER.US) to provide restaurant distribution services through the Instacart application, which aims to compete with the top US food distribution platform DoorDash (DASH.US).

Instacart users will be able to embed Instacart applications in the next few weeksBigbuffalomegawaysUber Eats interface to order food from hundreds of thousands of restaurants. These orders will be completed by Uber's distributors, while the grocery delivery service will remain independent and will continue to be operated by Instacart.

Dara Khosrowshahi, chief executive of Uber, said in a joint interview with Fidji Simo, chief executive of Instacart, that such co-operation posed a competitive threat to DoorDash, both as an independent entity and as a partner. He stressed that this is a highly competitive market, and the beauty of this partnership is that both Instacart and Uber can take this opportunity to develop their respective businesses.

As of press time, Instacart shares rose nearly 3 per cent in early trading and fell slightly, while DoorDash fell nearly 3 per cent.

Seymour revealed that she was the sponsor of the partnership, and although she did not elaborate on the financial terms of the deal, she said Uber would pay a referral fee for each order transferred to Instacart. Kosrosassi points out that restaurant merchants will not be able to tell whether orders are from Uber Eats or Instacart customers, because Instacart restaurant orders will be delivered through Uber Eats's system.

The partnership will help Uber expand its reach with suburban household customers and enable Instacart to provide more value to subscribers who pay $9.99 a month for membership fees, which are now available for free delivery of grocery store or restaurant orders for more than $35.

The present situation of Competition in Distribution Market

As the regular ordering habit developed since the outbreak weakens, US distribution applications such as Uber, Instacart and DoorDash are looking for new sources of growth. At the same time, these companies need to be accountable to Wall Street investors, keep costs low and continue to make profits. They are scaling back their operations, expanding into non-restaurant takeout and providing sponsored advertising space.

Through the partnership, the two companies will compete with DoorDash, which has 67 per cent of the US food distribution market, according to Bloomberg Second Measure. DoorDash also runs a growing grocery business and announced that it had doubled for the third consecutive quarter. Not only that, DoorDash also has the largest network of dispatchers, which will reach 7 million by 2023, while Uber has about 6.8 million drivers worldwide and Instacart has about 600000 drivers in North America.

Instacart, by contrast, was founded in 2012 and early signed an exclusive agreement with grocery chains to transfer their inventory online to serve customers who are used to going to the grocery store every week. However, with the expiration of these provisions in recent years, DoorDash and Uber have also established their own grocery delivery services and attracted many of the same retailers, successfully stealing part of the immediate or small grocery purchasing business from Instacart. At the same time, competition is intensifying as Amazon and Wal-Mart expand into the distribution of fresh agricultural products.

Instacart remains the leader in third-party apps for bulk grocery purchases and has more than 5 million paying users, according to public documents. Nick Giovanni, Instacart's chief financial officer, said in November that these loyal users accounted for more than half of the activities of the Instacart platform, which has more than 7.7 million monthly active users.

However, Uber, which started out as a ride-sharing service for wealthy customers in the city, now sees Instacart's family-centric suburban customer base as a potential market opportunity. Uber can attract these customers through cooperation with Instacart, rather than through actual acquisitions (that is, the purchase of Instacart) to achieve this goal.

Mr Kosrosassi said that while Instacart was a strong competitor in grocery distribution, the partnership was an opportunity for Uber to expand its Uber Eats business, especially in suburban markets where Instacart was particularly strong.

In January, Deepak Mathivanan, an analyst at Wolfe Research, considered the possibility of a merger of Uber and Instacart, arguing that it would create "financial synergies on revenue", prompting him to upgrade Instacart shares. Instacart shares posted their biggest one-day gain in three months after the report was released.

Mr Kosrosassi, an experienced dealmaker, has focused on controlling the cost of Uber and said acquisitions were "not possible" at the moment. Seamus of Instacart says her company is committed to operating independently.