Costco (COST)-Uber Alliance to Expedite Grocery Delivery

·3 min read

Thanks to the COVID-19 pandemic that made delivery for essential commodities including grocery all the more vital in the wake of social distancing. Expedited delivery services, be it doorstep delivery, curbside pickup or buy online and pick up at store have been gaining a lot of traction for a while now. As grocery delivery is here to stay, companies are focusing more on it by either expanding their capabilities or making strategic relationships. Progressing on such lines, Costco Wholesale Corporation COST in collaboration with Uber Technologies, Inc. UBER started a delivery pilot at its 25 locations across the state of Texas.

This allows members to get their on-demand grocery delivery within hours with Uber and Uber Eats mobile apps. We note that the minimum order value is $35 while the Uber Pass and Eats Pass holders can avail of a free delivery. Thus, Costco members can get more apart from groceries and daily essentials when the Costco store front is opened in Uber and Uber Eats. Now Uber users in Dallas, Austin and Houston can place orders from the local Costco warehouses.

The strategic partnership with Costco highlights Uber's first pilot with a food wholesaler across the United States. Costco looks to expand this initiative to seven more warehouses available to Uber users in the future weeks. Recently, Uber forged its first national grocery partnership in the country with Albertsons Companies, Inc. ACI. This agreement more than doubled Uber's grocery offering including the addition of 400 plus cities and towns comprising San Francisco and Phoenix.

Launched last July, Uber has been experiencing immense growth ever since for its grocery unit across the United States, having spread to several cities and towns. Uber is resonating quite well with the burgeoning consumers' demand everywhere. Via this pairing with Uber, Costco will offer its top-quality merchandise to consumers quickly, conveniently and at affordable prices. At present, Costco offers online ordering and delivery with the help of its own channels and other third parties.

What’s More?

Costco ranks among the predominant warehouse retailers based on the quality of merchandise it offers. The company’s growth strategies, better price management, decent membership trends and an increasing penetration of e-commerce business have been steadily contributing to its upbeat performance. Shares of this Issaquah, WA-based company have increased 11.2%, outperforming its industry’s 6.4% growth over the past three months.

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Costco’s expansion strategy also appears encouraging. It remains committed to opening clubs in the domestic and international markets to drive overall performance.

The company also launched CostcoGrocery to deliver non-perishable items to buyers’ homes and expanded its same day grocery delivery service in collaboration with Instacart. These delivery systems are consistently boosting traffic with higher yields.

Costco’s acquisition of Innovel Solutions, a leading provider of third-party end-to-end logistics solutions, which is now called Costco Logistics, has also been bolstering its e-commerce capabilities for sometime now.

Such well-planned endeavors are likely to continue retaining Costco’s solid momentum in the future. The stock currently carries a Zacks Rank #2 (Buy).

Apart from Costco, Dollar General DG is a renowned discount retailer in the industry. Dollar General has a long-term earnings growth rate of 11.3% and a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

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