Uber and Cornershop Flashcards
describe Cornershop briefly
- acquisition target for Walmart and Uber
- multi-sided platform
- -> connects personal shoppers, consumers, supermarkets
- for consumers:
- ->people who don’t have time or will to go to store
- for supermarkets:
- ->want to be a part of a new on-demand delivery distribution channel for their products
- for personal shoppers
- ->make revenue
describe Cornershop in its industry
- a major player in Latin America
- ->highest market share (70-80% in Chile in online supermarket)
- very competitive industry
- ->supermarkets own services, Doordash
- presence in Chile (where founded), Mexico, Brazil, Canada, Colombia, Peru, US
- achieved strong presence in just 5 years
- -> fast growth
describe Walmart’s attempted acquisition in 2018
- acquire delivery service
- vertically integrate–> don’t have to develop own
- boost e-commerce
- another distribution channel
- medium to compete against Amazon
- denied by Anti-trust in Mexico
- ->Walmart would gain too much power
- ->Walmart can use data on customers through Cornershop
- ->others can’t compete without Walmart products
- ->Walmart can push their products on the app
- -> Walmart has 68% in the supermarket industry in Mexico (next highest is only 17%) (other delivery services really need them)
- -> because of market share, acquiring Cornershop would destroy others–> Mexico doesn’t want monopolistic power
- -> 4% of supermarket channel is e-commerce
- -> negatively affect supermarket industry (Walmart can customize consumer orders since they get data from other supermarkets)
- -> likely to eliminate competitors in both industries
What could Walmart do instead of acquiring Cornershop? Why isn’t it ideal?
could organically create e-commerce distribution channel
disadvantage because
- takes more time (slower speed to market)
- may not have core competencies/knowledge
- now have Cornershop as competitor
- don’t gain Cornershop’s existing customers
- uncertain costs
- spend money on marketing
- Cornershop already has brand name
describe Uber generally
- operating in 69 markets, more than 10 000 cities
- -> growing
- several divisions
- -> Uber Rides
- -> Uber Eats
- -> Uber connect (get anything delivered, not very well developed yet)
-Uber eats is category leader in Australia, Canada, France and Mexico, but doing poorly in Latin America (had to stop operations in Argentina and Colombia)
- drivers are the first thing that needs to be secured
- -> they’re the supply
- -> since drivers have to be available for the platform to work
- -> critical to execution
why does uber want to keep drivers busy
- keeps supply,
- drivers can have multiple apps, if Uber can keep them busy, may be less likely to also use them
what are Uber’s strengths
- leading tech
- brand recognition
- network
- scale efficiency
describe Uber with regards to wanting to acquire Cornershop
- wants to be “operating system for your everyday life”
- wants to enter Latin American market
- wants to add additional service to model
- uber not very profitable
describe Uber’s acquisition of Cornershop
- horizontal diversification/integration for Ubers’ acquisition
- Anti-Trust approved it
- ->supermarkets were “strongly promoting the development of e-commerce” through their own platforms and delivery competitors are heavily investing
- -> wouldn’t cause elimination
- -> industry is competitive
describe the synergies between between Uber and Cornershop
- could cut software costs
- both get stronger presence/consumer base in different markets
- ->Uber in Latin America
- ->Cornershop in North America
- more suppliers
- -> drivers, grocery stores
- shared marketing efforts–> can bundle things, cross-promote
- cross-selling
- -> exposure
- increase driver utilization
Revenue increasers:
- Cornershop has stronger brand in Latin America
- -> can leverage this in different ways
- Cornershop customer base can be upsold things
- data
- -> can learn better what people want
- -> more contact points
- -> generate customer profiles
- -> a source of competitive advantage
- multipoint competition
- technology
- -> can be combined, complimentary tech
- can create switching costs for consumers
Who may Cornershop be better off with
Walmart
- stays within grocery delivery
- will try to absorb Cornershop, have less control/autonomy, would probably lose brand
- more stable, especially in Latin America
- has grocery knowledge
Uber
- can diversify
- more autonomy, lets cornershop maintain brand, autonomy in decision-making
- less guarantee for a stable consumer base with Uber
- can present more geographic expansion opportunities
What kind of acquistion Approach does Uber pursue, what are the advantages and disadvantages
Preservation
Adv:
-both bring own competencies
-both retain brand images
Dis:
- may not actually strengthen Uber’s brand image in Latin America
- org structures may restrict realization of synergies
what acquisition strategies should Uber pursue
- best of both world strategy could be good
- or absorption in some parts. of the world (where Cornership isn’t present)
what are obstacles in this acquisition
- clash of org culture–> key leaders may leave
- may have hard time paying off debt –> especially because Uber not profitable
- consumers may leave for competitors
- drivers may go to competitors
