Uber aims to beat FedEx at its own game
FedEx (FDX) was started on the premise that consumers and businesses would pay for the privilege of overnight delivery.
Now, Uber is aiming to one-up the now-giant delivery service. Starting today, businesses in Chicago, New York and San Francisco can pay Uber a few bucks for same-day delivery of anything from flowers to food to their customers. Like FedEx when it first started, Uber's idea isn't entirely new, but it's aiming to woo consumers through a new method of delivery and payment.
The service, called Uber Rush, will use the company's network of drivers as well as bicyclists to bring packages to people in big cities within minutes. While FedEx is geared toward longer-distance delivery, Uber is aiming to conquer local delivery, such as picking up groceries for customers or items at the drugstore.
According to Uber, all those little trips are a big problem, eating up consumers' time as well as creating logistical nightmares. Not to mention the carbon emissions. In fact, according to Uber, these types of neighborhood trips are a major environmental hazard.
"These little runs seem harmless but they add up," the company said in a statement. "In fact, 20 percent of all trips in the U.S. are just to move things from A to B -- and we're wasting thousands of hours and gallons taking them."
That might be the case, but the fact is most consumers won't be convinced unless it also makes sense to their budgets. Uber appears to be aware of that. The company noted that the delivery service will be charged to businesses, not customers. However, businesses using Uber Rush will likely pass that cost to customers through higher prices or extra fees.
Uber didn't immediately return a CBS MoneyWatch request for comment.
Fees start with the delivery's first mile, ranging from $5 to $6, depending on the city. Then there's a per-mile fee of $2.50 to $3 for every mile after that. Couriers will split the fees with Uber, according to USA Today.
Like its car service, Uber's delivery service has a tracking option. Businesses can track where Uber drivers (or bicyclists) are, letting customers know when they'll get their order.
If the idea sounds eerily familiar to another dot-com business, there's a reason why. Back in 1998, a startup called Kozmo.com vowed to delivery everything from food to dry-cleaning within an hour to New Yorkers by tapping a network of bicyclists and drivers. The service had a lot of buzz and plenty of fans, but Kozmo went kaput when the dot-com bubble burst in 2001.
Uber, however, is likely betting that this time will be different. In at least one way, it is: Uber has a valuation of $50 billion, thanks to the deep pockets of its investors, making it only one of two startups to reach that lofty valuation. The other is Facebook (FB).