If you’ve never heard of Uber Connect, you might think it’s some sort of ridesharing social media app. While it’s true that the service connects people, it doesn’t do it through pictures or status updates — rather, Uber Connect was launched in April 2020 to offer same-day local delivery services to Uber users.
The initial rollout of Uber Connect was a way for Uber (NYSE: UBER) to test new additions to its delivery business, which has now surpassed its ridesharing segment and, according to CEO Dara Khosrowshahi, has never been in a better position. That’s largely due to the success of the now-profitable Uber Eats, but the company has also been experimenting with things like grocery delivery, delivery by robot and a white-label delivery service that allows local merchants to make use of the company’s drivers.
Now Uber is bolstering its delivery service yet again. The company is expanding Uber Connect to provide same-day local delivery services to 6,000 U.S. cities and towns — including every major metropolis from New York to LA — and is adding a pair of new features to boot.
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Launched shortly after the pandemic began, Uber Connect was initially tested in 25 cities in the U.S., Australia and Mexico, and its most recent U.S. expansion in December 2020 added an additional 2,400 cities. But since then, the service has continued to grow, recording a 200% increase in trips since the beginning of 2021, which gave Uber enough confidence to expand it again.
Unlike a traditional parcel delivery service, Uber Connect doesn’t require postage or a trip to the post office — an Uber driver will deliver the package directly from the user’s location. All the user needs to do is prepare and secure the package, which must be limited to under 30 pounds and $100 in value, and select the “Connect” option in the Uber app.
As part of Uber Connect’s expansion, users can also include special delivery instructions for their driver, so there’s no need to slap a “Fragile” label on the box. And whereas the service used to require the sender to meet the driver curbside, Uber has now added the option for no-contact pickup and deliveries, so the sender can simply leave the package at his or her doorstep.
The expansion of the Uber Connect service is in line with comments from Khosrowshahi during this week’s live webcast hosted by UBS, during which the Uber CEO told investors that the company is looking to continue pushing growth in its delivery segment.
“I think looking at 2022, we think we can not only invest in these growth areas — grocery, new verticals, direct, etc. — but also deliver incremental margins as it relates to delivery at or above our long-term margins,” Khosrowshahi responded when asked about the perceived shift in Uber’s strategy from growth to profitability.
In his view, those two points of emphasis are not mutually exclusive. He backed his stance up with statistics about the company’s delivery business, which he said has more than tripled in size since Uber’s IPO in 2019 yet also managed to achieve profitability in 2021, outside of the grocery segment.