Harvard Case - Uber and Cornershop: An Acquisition in the Multi-sided Platform Space
"Uber and Cornershop: An Acquisition in the Multi-sided Platform Space" Harvard business case study is written by Jorge Tarzijan. It deals with the challenges in the field of Strategy. The case study is 13 page(s) long and it was first published on : Apr 7, 2021
At Fern Fort University, we recommend that Uber proceed with the acquisition of Cornershop, leveraging its existing platform and resources to expand into the grocery delivery market in Latin America. This strategic move will allow Uber to capitalize on the rapidly growing online grocery market, diversify its revenue streams, and solidify its position as a leading multi-sided platform in the region.
2. Background
The case study focuses on Uber's acquisition of Cornershop, a Chilean startup specializing in grocery delivery services. Uber, a global ride-hailing giant, aimed to expand its reach into the burgeoning online grocery market, particularly in Latin America. Cornershop, with its established presence and strong brand recognition in the region, presented an attractive opportunity for Uber to enter this new market segment.
The main protagonists of the case study are:
- Uber: A global ride-hailing company seeking to diversify its business model and expand into new markets.
- Cornershop: A Chilean startup specializing in grocery delivery services with a strong presence in Latin America.
- Dara Khosrowshahi: CEO of Uber, who spearheaded the acquisition strategy.
- Oscar Cristi: CEO of Cornershop, who negotiated the acquisition deal.
3. Analysis of the Case Study
Strategic Analysis:
- Porter's Five Forces: The online grocery market in Latin America is characterized by high competition from established players like Rappi and Mercado Libre, as well as local grocery chains. Low switching costs for consumers and high bargaining power of suppliers (grocery stores) further complicate the market landscape. However, Uber's strong brand recognition, extensive network of drivers, and existing logistics infrastructure provide a competitive advantage.
- Ansoff Matrix: The acquisition of Cornershop represents a market development strategy for Uber, allowing them to enter a new market segment (online grocery delivery) while leveraging their existing core competencies (technology, logistics, and customer base).
- BCG Matrix: Cornershop, with its high market growth potential and strong market share in Latin America, can be categorized as a Star in the BCG Matrix, signifying a promising investment opportunity for Uber.
Financial Analysis:
- Value Creation: The acquisition of Cornershop is expected to generate significant value for Uber through increased revenue streams, expanded customer base, and enhanced market share in the rapidly growing online grocery market.
- Resource Allocation: Uber's financial resources can be strategically allocated to support Cornershop's growth and expansion into new markets within Latin America.
Marketing Analysis:
- Brand Management: Uber's strong brand recognition can be leveraged to enhance Cornershop's visibility and customer acquisition efforts.
- Marketing Strategy: Uber can integrate Cornershop's services into its existing platform, leveraging its existing marketing channels and customer base to drive adoption.
Operational Analysis:
- Supply Chain Management: Uber's existing logistics infrastructure and network of drivers can be utilized to optimize Cornershop's delivery operations, ensuring efficient and timely delivery services.
- Technology and Analytics: Uber's advanced technology and data analytics capabilities can be integrated into Cornershop's platform to enhance customer experience, optimize delivery routes, and gain valuable insights into consumer behavior.
Other Considerations:
- Globalization: The acquisition allows Uber to expand its global footprint and tap into the growing online grocery market in Latin America.
- Emerging Markets: Cornershop's presence in emerging markets provides Uber with an opportunity to gain valuable experience in operating in these challenging environments.
- Disruptive Innovation: The acquisition represents a strategic move by Uber to embrace disruptive innovation and expand its business model beyond ride-hailing.
4. Recommendations
Short-term:
- Integration: Seamlessly integrate Cornershop's operations into Uber's platform, leveraging existing technology and infrastructure to optimize delivery processes and enhance customer experience.
- Marketing and Promotion: Leverage Uber's brand recognition and marketing channels to promote Cornershop's services to existing and new customers.
- Expansion: Focus on expanding Cornershop's presence in key markets within Latin America, leveraging local knowledge and partnerships.
Long-term:
- Product Development: Develop new features and services to enhance the online grocery experience, leveraging data analytics and AI to personalize recommendations and improve customer satisfaction.
- Strategic Alliances: Partner with key players in the grocery industry to expand product offerings and reach a wider customer base.
- Vertical Integration: Explore opportunities for vertical integration, such as acquiring or partnering with grocery stores to control the entire supply chain and enhance value proposition.
5. Basis of Recommendations
The recommendations are based on the following considerations:
- Core Competencies: Uber's core competencies in technology, logistics, and customer acquisition align well with Cornershop's business model, enabling efficient integration and expansion.
- External Customers: The acquisition caters to the growing demand for online grocery delivery services in Latin America, providing a convenient and efficient solution for consumers.
- Internal Clients: The acquisition provides Uber's drivers with additional earning opportunities and expands their service offerings.
- Competitors: The acquisition strengthens Uber's position in the competitive online grocery market, enabling them to compete effectively with established players.
- Attractiveness: The acquisition is expected to generate significant value for Uber through increased revenue streams, expanded customer base, and enhanced market share in a high-growth market.
Assumptions:
- The online grocery market in Latin America will continue to grow at a rapid pace.
- Uber's brand recognition and existing infrastructure will be effective in driving customer adoption of Cornershop's services.
- Integration of Cornershop's operations into Uber's platform will be successful and efficient.
6. Conclusion
The acquisition of Cornershop presents a strategic opportunity for Uber to expand its business model, diversify its revenue streams, and solidify its position as a leading multi-sided platform in Latin America. By leveraging its existing resources and expertise, Uber can successfully integrate Cornershop's operations and drive growth in the rapidly expanding online grocery market.
7. Discussion
Alternatives:
- Organic Growth: Uber could have chosen to develop its own online grocery delivery service from scratch, but this would have required significant investment in technology, logistics, and marketing.
- Strategic Partnership: Uber could have partnered with an existing online grocery delivery company, but this would have limited control over operations and potentially resulted in conflicts of interest.
Risks:
- Integration Challenges: Integrating Cornershop's operations into Uber's platform could be complex and time-consuming, potentially leading to operational inefficiencies.
- Competition: The online grocery market in Latin America is highly competitive, and Uber may face challenges in establishing a dominant market position.
- Regulatory Environment: The regulatory environment for online grocery delivery services in Latin America can be complex and unpredictable, potentially impacting operations.
Key Assumptions:
- The online grocery market in Latin America will continue to grow at a rapid pace.
- Uber's brand recognition and existing infrastructure will be effective in driving customer adoption of Cornershop's services.
- Integration of Cornershop's operations into Uber's platform will be successful and efficient.
8. Next Steps
Timeline:
- Month 1-3: Complete integration of Cornershop's operations into Uber's platform.
- Month 3-6: Launch marketing campaign to promote Cornershop's services to Uber's existing and new customers.
- Month 6-12: Expand Cornershop's presence into new markets within Latin America.
- Year 1-2: Develop new features and services to enhance the online grocery experience.
- Year 2-3: Explore opportunities for strategic alliances and vertical integration.
Key Milestones:
- Successful integration of Cornershop's operations into Uber's platform.
- Significant increase in customer adoption of Cornershop's services.
- Expansion into new markets within Latin America.
- Development of new features and services to enhance the online grocery experience.
- Establishment of strategic alliances and partnerships with key players in the grocery industry.
By implementing these recommendations and closely monitoring progress, Uber can successfully capitalize on the acquisition of Cornershop and achieve its strategic goals of expanding into the online grocery market and solidifying its position as a leading multi-sided platform in Latin America.
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Case Description
In mid-2020, Uber Technologies, Inc. (Uber) acquired Latin American-based mobile application Cornershop, which delivered online grocery purchases to the consumer's home. The operation involved technology firms based on multisided platforms. Uber, which focused on the intermediation of passenger transport, had expanded to businesses such Uber Eats for the delivery of restaurant meals, while Cornershop's focus was the purchase and delivery of supermarket products. Recently, Walmart had attempted to acquire Cornershop, but Mexico's antitrust authorities would not authorize the acquisition. Uber's acquisition of Cornershop involved important managerial challenges. What were the main sources of value? Should the two companies be managed separately or as joint units? Would Walmart have been a better fit for Cornershop? What was the best strategy to grow in this multisided business space?
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