×

Uber edges into on-demand delivery with small businesses

Targeting mom and pops with UberRUSH

Uber is officially getting into the small business space, launching an on-demand delivery service powered by its courier business UberRUSH.

The new push into small businesses rolled out Wednesday in New York City, Chicago and San Francisco. A flower shop, for example, can use UberRUSH for deliveries.

The new delivery option will likely complete with local courier services including bike messengers, and join a growing list of companies offering or testing on-demand delivery, including Amazon.com and Etsy.

UberRUSH charges small businesses fees that those merchants can decide to pass along to customers outside the UberRUSH platform. Depending on the city and delivery location, fees to participating small businesses can include a base delivery fee ranging from $2.25 to $3 per delivery; a per-mile delivery fee of $2.50 to $3; and a minimum per-trip fee of between $5 and $6.

UberRush offers new delivery service targeted at small businesses.
Source: UberRush
UberRush offers new delivery service targeted at small businesses.

The small-business push by Uber was originally piloted in April 2014 in New York City. Couriers make deliveries on foot or use cars and bicycles.

"Uber's new push offering delivery from local merchants boosts local economies and takes Amazon head on," says Jeremiah Owyang, analyst and founder of Silicon Valley-based Crowd Cos.

Amazon offers a same-day delivery service. Etsy will test same-day and next-day delivery this holiday season with Postmates, a delivery start-up. Analyst Owyang says he expects Amazon and UberRUSH to go head-to-head in on-demand delivery.

Uber's new small business delivery platform is intended to attract businesses that may not have offered delivery in the past, an UberNYC spokesman told CNBC.

"This will give over 1,000 small businesses in New York City the chance to use Uber for same-day delivery," said Josh Mohrer, general manager for UberNYC told CNBC in an emailed statement. "With UberRUSH it's even easier for New Yorkers to patronize small businesses in their neighborhood with the push of a button."

The service for small businesses was piloted by Alexandra Mann, co-owner of New York City-based retail shop Sam & Lex Boutique. The shop is doing between two and five deliveries daily using UberRUSH. They previously did not offer delivery. Now using UberRUSH, the business sometimes charges customers a flat delivery fee of $5, depending on delivery location.

"Our customers can't believe how fast and efficient it is," said Mann. "We also use it for returns, and have UberRUSH bring them back to our store. The price is also low compared to other messengers in New York City."

Additionally, Uber also offers a food delivery service called UberEATS in select cities.

Read MoreLured by income and flexibility, retirees becoming Uber drivers