Uber extended its service portfolio in its move to acquire Drizly in a $1.1 billion deal on Tuesday, February 2nd, 2021. From groceries to people, and mood-elevating beverages to prescriptions, Uber has taken a swift move to bring you everything you want at your doorstep through its vertical expansion strategy in its previous partnership with NimbleRX, acquiring Postmates, and now, Drizly.
What is Drizly and Why Does It Matter?
Drizly has distinguished its operations as one of the leading online delivery stores majoring in local liquor. Essentially, the online alcohol store partners with local sellers to enlist their products in delivery drivers. It is not a surprise that Uber Eats also operates in a similar fashion.
That critical similarity will help both parties to integrate smoothly if other factors do not interfere in the process.
At the time of the acquisition announcement, Drizly had a strong presence in over 1,400 towns and cities across the U.S.
Uber Adds More Value
In the acquisition deal, Uber’s eventual plan includes alcohol delivery in its Uber Eats platform while operating Drizly as a standalone internet-based venture. However, the acquisition deal did not include Drizly’s Lantern segment, which majors in cannabis delivery.
Uber’s acquisition move comes when its rides business is hard-hit by the pandemic, which restricted people’s movements across the country. Uber indicated that its Uber Rides revenues dropped by 53% in the third quarter of 2020. Nonetheless, the company increased its net profit in its food delivery section by over 125%.
Future Demand and Growth Opportunities
There is minimal information on the demand that Uber forecasts from the alcohol sales after sealing the acquisition deal. Nonetheless, the contract was steered by Drizly’s positive record as it had experienced 300% gross bookings profit yearly.
The acquisition move came after Uber’s unsuccessful action in buying GrubHub in 2020. The rides company has started higher-level strategic moves to venture into the Canadian and Latin American markets. It will do so with a specialty in the delivery of on-demand groceries and expansion of the Uber Health platform to include prescription deliveries. Uber’s acquisition of Drizly is a perfect match for the rider’s delivery-focused business.
The Softbank backed firm is known for its aggressive strategy of absorbing the service ventures it acquires in its significant apps. There’s a likelihood that the acquirer will amass Drizly’s customer data and client bases while taking advantage of its broad market segments and efficient user interfaces to boost its revenue flows.
Uber’s management considers the deal as one with numerous advantages to its value chain and Drizly. While Uber’s drivers will access more delivery opportunities and consumer segments, Drizly’s operations will get a boost from Uber’s gigantic customer bases and routing systems.
The firm’s chief executive Dara Khosrowshahi revealed in a press statement that the acquisition contract could speed up the online liquor seller’s “trajectory by exposing Drizly to the Uber audience and expanding its geographic presence into our global footprint in the years ahead.”
Remarkably, both Uber and Drizly depend on contract workers to run their operations. The two companies expect to finalize the acquisition deal by the close of the first half of 2021. Uber is confident that its stock will finance over 90% of the acquisition deal while the remainder will be offset in cash payable to Drizly’s shareholders.