Uber is stepping into the food delivery business in Canada, a move that could lead to the controversial digital ride-sharing service expanding further into shipping same-day orders for other retailers.
San Francisco-based Uber Technologies Inc. is launching UberEATS in downtown Toronto on Thursday, teaming with pricier restaurants such as the trendy Bar Buca for lunch orders. It allows customers to order from its app, for instance, a $12 porchetta schiacciata (roast Tuscan pork sandwich), which Uber says it will deliver at the curb within 10 minutes plus a $3 shipping charge, which it is waiving for now.
Industry watchers say the initiative, which has been recently rolled out in three U.S. cities and Barcelona, could lead to Uber expanding further and potentially shaking up existing e-commerce and delivery services.
"This is a game changer," Elyse Knopf, the UberEATS regional lead in Chicago. "We're talking about delivery in 10 minutes or less, often five minutes or less ... We're a technology company. We're always looking for new and innovative ways to connect people."
Uber's search for new ways to apply its technology and data analytics threatens to set the ride-sharing service on a collision course with incumbent delivery services and put more pressure on retailers to provide fast and efficient shipping.
The low-cost Uber has already pinched taxi companies, prompting them to complain the emerging service operates outside regulations they must follow, while municipal governments have launched legal challenges to Uber. Amid the challenges, retailers are racing to find new ways to respond to customers' rising expectations of receiving their e-commerce orders quickly and at a low cost, making it enticing for merchants to consider partnering with Uber.
"Consumers are demanding effortless convenience in everything, yet they're very selective about what they're willing to pay for," said Luke Sklar, partner at marketing consultancy Sklar Wilton & Associates.
Uber's low-cost delivery model "could be a decent business, if they actually deliver" and come through with its plans, Mr. Sklar said. "It meets a clear need – and let the market decide."
Amazon.ca, which introduced its own same-day delivery in November, has had "really positive" customer feedback, said Katie McFadzean, spokeswoman for Amazon.com Inc.
"We're seeing more and more of our customers using same-day delivery and we'll continue to build the program," she said of the service, which costs $6.99 for its Prime members and, for others $11.99 for the first item and $1.99 for each additional item.
Jim Danahy, chief executive officer of consultancy CustomerLAB, said retailers are going to have to move more to spinning off their warehouses and delivery fleets and sharing their supply chain capabilities to respond to consumers' demands.
"This is about the consumer being in charge now and the shared economy is migrating into the corporate world," said Mr. Danahy, who is also program director of the centre of excellence in retail leadership at York University's Schulich School of Business.
He said Uber and other players will increasingly compete to deliver retailers' sofas and burritos in an efficient manner.
Still, Peter Sheldon, vice-president at technology specialist Forrester Research, said same-day delivery has limited appeal to a small niche market of customers who can afford the fees. Even so, the UberEATS works well for downtown urban consumers with a swelling appetite for a wider array of food offerings than the standard pizza deliveries, he said.
UberEATS, which allows customers to order one of two signature lunch dishes from the participating restaurant, has already learned from its initiatives in New York, Los Angeles, Chicago and Barcelona, Ms. Knopf said.
Its peak order times are between 11 a.m. and 12:30 p.m., and "hearty" items such as hamburgers and pork sandwiches are more popular than "healthy" items such as salads, she said. Designated drivers have a supply of insulated bags with the boxed food in the vehicle with them, keeping it hot (or cold) and ensuring they get to their customer within 10 minutes, without having to return often to the restaurant, she said.
"We're able to bring the food to people who otherwise wouldn't be able to access it ," Ms. Knopf said.
Robert Gentile, executive chef and partner at King Street Food Co., which owns Bar Buca, said he's a big Uber user and is betting the delivery service will boost his business. It already enjoyed growing takeout sales, but did not offer deliveries.
The Canadian "carry-out" food service sector, which generates about $13.2-billion in annual sales, is a burgeoning segment: It grew 4.3 per cent in the year ended Feb. 28 – more than the 3.2 per cent gain in the previous year, according to researcher NPD Group.
"It's all about being accessible to neighbourhood people," Mr. Gentile said.
Uber last month tested grocery deliveries with Loblaw Cos. Ltd., which itself is just beginning to pilot e-commerce. The test saw "great engagement from Torontonians who are always looking for a more convenient way to shop," Uber spokeswoman Susie Heath said. Uber has no plans for new products or promotions "at the moment," she added.
UberEATS, whose items range from about $8 to $12 each, has 11 partnering restaurants to start with, including Bar Buca: The others are California Sandwiches, Fresh Restaurants, P&L Burger, Caplansky's, IQ Food Co, Kupfert & Kim, Hawker Bar, Valdez, Three Little Pigs and Khao San Road.