Analysis

Is Uber’s parcel delivery service a threat to couriers?

Uber has announced two new services which put it squarely on the home turf of traditional parcel carriers.

Uber Connect allows consumers to send parcels to each other. This service is available in 25 cities in Australia, Mexico, and the US.

Uber Direct sees the company doing deliveries for retailers in New York City, Portugal, Australia and South Africa. Currently these pilots are largely focused on medicines.

Uber says Direct “builds upon” Uber Eats’ recent expansion into delivering groceries, notably with Carrefour in France.

Nonetheless, this move sees Uber firmly advancing onto the traditional territory of parcel carriers. Uber said in a blog post that it had “heard from retailers and manufacturers around the world looking to introduce delivery through Uber, as an operationally efficient way to reach their customers or manage internal delivery needs.”

The company, which originally started as a ride-hailing service, benefits from being able to get drivers on the road and doing deliveries quickly. The recruitment process is essentially zero-touch for Uber: drivers simply sign up through a mobile app and can quickly begin making deliveries. Orders can effectively be fulfilled from any location.

Whether Uber can support the kinds of volumes that carrier services are used to handling for retailers is a different question. Uber says on its website that a driver doing a single 5.2 mile order could be paid as much as £6.70, which combined with the labour costs of preparing the order, would eat significantly into retailer margins and would be likely to make the costs prohibitive. In addition, Uber drivers often use smaller vehicles such as motorcycles so will not be able to deliver the same number of parcels on a route as a courier van.

Unless Uber can find a way of increasing the all-important parcel drop density it will remain a useful supplement but not a competitor to the traditional courier route.