uber case Flashcards
what is coronership
App to order from supermarkets
Market leader (70-80% sales volume in chile)
Most present in south america
Cornershop: target demographic is targeted toward young professionals and university students
How does
Actual custustomers who dont want to go inside the stores they order online isntead
Revenue: supermarkets, participate so do the personal shoppers
Can reach more customers though developing onlien channel
what motivates supermarkets —> increase customer base
a lot of growth
people who don’t have time for a full trip to the grocery store
personal shoppers were trained, had profiles , wanted to work there bc of flexible schedules and weekly oayemts
had non exclusive agreements with som e retailers
launched in Chile
who is cornershops competition
Competition: doordash, instacart, delivery apps, supermarket chains, supermarkets were creating their own apps
Active competition
market is competitive
What was the strategic reason walmart wanted to by cornershop→
because of amazon, they knew they were not focused on ecommerce and this was their disadvantage, walmart had a large market share , specific to the region of south america e commerce f
Walmart was lacking this online development
Diversification that was represented from the acquisition of corner shop by walmart: vertical integration (buying a new additional distribution channel), forward vertical integration ( cornershop is a distribution channel they would be purchasing, clsoer to the end consumer)
why did anti trust authorities say no to this acquisition
they feared walmart would become a monopoly and have too much power over the grocery market and potentially the delivery market
Walamrt would cause elimination of competitors if they acquired cornershop
How does this affect supermarket → if wlmart owns conershop which is a dominant app, it will own the data, transactions from other supermarkets → can understand what consumers like, sales patterns
Can see what competitors products were the most popular, canc control the visibility of products on the app (put competitors products at disadvantage and copy competitors products based on data they can collect)
hinders fair Competition
what is Walmarts strategic goal
want to increase their presence in south america and e commerce,
advantages of an acquisition
by going with this route they can have a system that already works without having to do anything, they have the money to buy it, cornershop already has a large market share, buying the existing tech that is proven to work, predictability ,may spend a lot of money for it not to work, have to compete against cornershop, acquire customers, do marketing, lot of uncertainty, will take time , speed to market is slower
what is uber really good at
hey are accessible and easy to use, the biggest asset for uber is data they own, technology of the app, can predict demand, Technology of the app is very valuable, more efficient compared to classic taxis
why does uber need a supply of drivers
customers can become unhappy if not enough drivers
synergies between uber and uber eats
Uber eats and uber drivers can do the same job → dont need to hire as much, keep drivers occupied, creates loyal workforce of drivers , wont serve competitors
For non peak times people still want to eat so they can mix up the drivers
how does uber eats generate revenue
Uber eats took a cut of 15-40 percent on every order
why does uber want to acquire conershop
Expansion throughout latin america and south america, specifically through cornershop because they can create synergy through data sharing and insights sharing
Part of ubers strategy is to be able to delivery everything to everyone, they want to add another division(grocery division) all through the same tech and app
What type of diversification when adding grocery division:
horizontal
why did anti trust authorities allow uber to acquire coronership
looked if competitors would be eliminated, would uber have an unfair advantage. At that time many supermarkets developed their own apps, corner shops comp increased, we dont think with horizontal diversification much will change
Didnt feel that uber was a threat
synergies uber can realize through acquisition
expanding customer base, bringing knowledge from cornershop about grocery so dont have to pay costs
synergies coronership can realize
provides drivers with another service ( personal shoppers) making drivers more busy so they dont go to competitors.
synergies
Enrich ubers data coming from grocery division, info on local customers
Once stop shopping for user
Uber is already investing continuously to improve
Reduce costs by creating economies of scale, economies of scope because they are sharing their resources
Cornershop and uber understand each other
Both tech companies so can integrate their technologies
Cross promotion among different divisions → cornershop is stronger in south america, internationally uber is stronger
20-30% also like to order from restaurants of cornershops customers, so ubereats can gain more revenue from this too
Are customers more loyal to cornershop or uber
Customers said that uber is fully replaceable but cornershop is more differentiated and not replaceable
Uber can capatalize on this→ cross promotions, offer bundles
what does cornershop bring to uber
Brings customers
Fast delivery
Personalized shopping
Brings technology and network of supermarkets
Uber Inherits the suppliers
Integrate tech
By acquiring cornershop uber can strengthen its competition against multi point competition like other brands that offer a variety of things
in cornershop view, would you want uber or Walmart
Geographical expansion: uber is better bc its international
Strengthening presence in south america: walmart is better
Technology and logistics: uber is better, they have an app. Wlamart wanted to acquire cornershop for its tech
Stability of revenue, loyal customers: Uber is a startup walmart is more established, int terms of customers and grocery sales that happened online is 4%, people still buy traditionally in the stores, e commerce for buying groceries is growing but small % buying groceries online
The future of cornershop brand→ uber would allow for cornershop to keep their brand name, uber doesnt have a strong brand name in south america whereas walamrt does so they dont need to capitalize on it as much as uebr does
what type of integration strategy
At the start was preservation (promised autonomy) → no one would be replaced and cornershop brand name is kept
avantage of using preservation
Cornershop has a strong brand name and is loved and irreplaceable unlike uber, so why not preserve that instead of change it to uber’s less popular brand name
disadvantage of using preservation
might be hard to form synergies
postulates
Another acquisition was postmates and also used preservation strategy
über and coronership are what type of platforms
multisided
business model of cornershop
consumers can purchase from grocery stores
apps listed had an agreement w cornershop
charged a delivery fee
personal shopper does your order–> they have their own trasnprotion
customers pay cornershop and cornershop pays the grocery store
founders and early history of cornershop
first they tested the idea and was launched in Chile wanted to seek scalability
at the tine, had the highest market share in the supermarket industry
failed cornershop and Walmart merger
Walmart wanted to boost its e commerce ambitions in Latin America
would create significant barriers to entry for other supermarkets
would create a vertical integration –> exclude cornershops competition and Walmarts comepttotors
uber
has good tech, brand recognition, massive network, operational and scale efficiency but was insuring losses
über eats and über could share drivers, have to keep the drivers loyal
über was in Chile
the transaction
was allowed bc other supernkarts were investing in their development of e commerce
über was expanding to clothing, toy uber wants to expand throughout t Latin America
good for cornershop bc they can offer grocery services in many markets
they were kept as distinct rands and cornershop would continue under its previous leadership, had autonomy
competition in the market of delivery applications
über eats comètes with door dash, grub hub, postulates
at the end of 2020, door dash was leading and was try to expand
uber bought postmates –> postmates would still operate under its own name
in Chile, category of delivery apps was growing
cornershop led online supermarket sales in Chile
people have more than one delivery platform though and people think uber eats is replacable
dont want to pay for subscription
conclusion
multisided platforms allow access to third party goods
were becoming super attractive, growing bc of e commerce and consumer habits
stikl have challeges w structure, value creation, networks
should they operate indepdenlty
cornershop was going to be a separate company but until what point?
why does uber want to expand to South America
stiff competition in the market
acquisition between Walmart and cornersjop
would imply a vertical integration
Cornershop is a last-mile delivery service that bridges the gap between grocery retailers and consumers. By acquiring Cornershop, Walmart would have gained direct control over the logistics and delivery aspect of its grocery business, reducing reliance on third-party delivery services.
This would have allowed Walmart to streamline operations, improve delivery efficiency, and potentially reduce costs related to contracting external delivery services
would provide significant barriers to entry
in Chile, was delivery application growing
yes by a lot, people wanted to jlom
