Kroger's Multi-Platform Delivery Play: Scaling to Capture Online Grocery's $1.4T TAM

Kroger is making a decisive pivot, trading expensive, capital-intensive automation for a scalable platform model. The company is scaling back its reliance on automated fulfillment centers, a move underscored by a $2.6 billion impairment charge related to its dissolved partnership with Ocado Group. This strategic retreat from building its own automated warehouses signals a focus on agility and rapid market capture over vertical integration.

The new approach is built on partnerships. The most significant is with Uber, which now delivers groceries from nearly 2,700 Kroger-owned stores nationwide via the Uber Eats, Uber, and Postmates apps. This partnership, announced this week, is a direct scaling play, instantly expanding Kroger's digital footprint to millions of customers already using Uber's delivery network. It follows a similar move last fall to expand its DoorDash tie-up, showing a broader strategy of embedding its offerings into major third-party platforms.

This shift is perfectly timed. The U.S. online grocery market is on a steep growth trajectory, with a compound annual growth rate (CAGR) of 21.3% projected through 2029, ballooning to a $1.4 trillion total addressable market. By leveraging Uber's existing infrastructure and customer base, Kroger can capture this growth without the massive upfront costs of building and operating fulfillment centers. It's a capital-light model that prioritizes speed of execution and market penetration over control of the final mile.

Competitive Moat: Maximizing Reach Across Customer Segments

Kroger's multi-platform strategy is building a formidable competitive moat by maximizing its reach across diverse customer segments. The recent partnership with Uber is a masterstroke in this effort, instantly connecting Kroger to a massive, ready-made audience. By listing nearly 2,700 Kroger-owned stores on the Uber, Uber Eats, and Postmates apps, the grocer gains access to millions of users already embedded in Uber's ecosystem. This isn't just about convenience; it's about leveraging Uber One's $0 delivery fee to enhance appeal and lower the barrier to entry for online shopping. The result is a powerful flywheel: more customers on Uber's platform drive more orders for Kroger, which in turn strengthens the partnership.

This reach directly counters a major threat: cross-shopping to mass merchants. Data shows that regional grocers are losing ground as more shoppers use multiple platforms. In September, the share of monthly active users who also ordered online from mass merchants like Walmart continued to expand significantly in 2025. Kroger's platform play is a direct response. By being present on the same apps where consumers order from competitors, Kroger makes it easier for them to stay within its ecosystem. The partnership even includes promotions that bundle Kroger's Boost membership with Uber One, further incentivizing loyalty.

The strategy is further strengthened by a complementary platform: DoorDash. Kroger's expanded tie-up with DoorDash last fall, which includes nationwide store access and plans for DashMart Fulfillment Services, ensures the grocer isn't betting on a single delivery network. This dual-platform approach maximizes reach across different customer segments and delivery preferences. While Uber excels in broad urban reach and its own delivery fleet, DoorDash brings its own strengths in speed and convenience, particularly for smaller, on-demand orders. Together, they create a pervasive digital footprint that is difficult for a single-platform competitor to match.

The bottom line is scalability. Instead of building costly, proprietary delivery infrastructure, Kroger is embedding itself into the dominant third-party platforms. This capital-light model allows it to capture a larger share of the rapidly growing online grocery market, which hit a record $12.5 billion in September. By meeting customers where they already are, Kroger is turning its vast store network into a scalable digital distribution engine.

Financial Pathway: From Growth to Profitability

The platform strategy is not just about scaling reach; it's a clear financial roadmap from growth to profitability. The demand signal is strong, with eCommerce sales increasing 17% last quarter. That momentum is the fuel for the company's explicit 2026 target: to make its online business profitable. This turnaround is directly enabled by the lower-cost model of partnering with Uber and DoorDash, which avoids the massive capital expenditure and fixed costs of automated fulfillment centers.

This financial discipline supports Kroger's broader capital allocation goals. The company's net total debt to adjusted EBITDA ratio is 1.73, well below its stated target range of 2.30 to 2.50. By shifting to a capital-light platform model, Kroger preserves significant financial flexibility. This buffer allows it to invest in its core business, fund share repurchases, and maintain its investment-grade credit rating without over-leveraging.

The path forward is now defined. After a period of strategic review and a major impairment charge, the company is focused on executing this scalable model. The combination of robust eCommerce growth and a clear path to profitability in 2026 suggests the platform play is working. It transforms Kroger's vast store network from a cost center into a scalable digital engine, all while keeping its balance sheet strong and ready for the next phase of growth.

Catalysts, Risks, and What to Watch

The near-term catalyst is clear: the launch of discounts to drive first-time user acquisition. To mark the new partnership, Uber is offering customers discounts of up to 50% off their first order from select Kroger banners. This aggressive promotion is a direct shot at converting Uber's massive user base into new online grocery customers. The success of this campaign will be a key early indicator of the platform's ability to scale quickly and capture market share from competitors.

The primary financial metric to monitor is the trajectory of eCommerce sales and its margins. The company has set a clear target: to make its online business profitable in 2026. The recent 17% growth in eCommerce sales last quarter provides a solid foundation, but the path to profitability hinges on sustaining that growth while controlling costs. Investors should watch for consistent quarterly growth in this segment, alongside any improvement in its margin profile, to confirm the capital-light platform model is delivering the promised financial discipline.

The main execution risk is operational integration. Successfully embedding nearly 2,700 Kroger-owned stores into third-party delivery apps requires flawless coordination across inventory, fulfillment, and customer service. Any breakdowns in this complex, multi-platform network could damage the customer experience and undermine the convenience promise that is central to the strategy. The risk is amplified by the simultaneous expansion of the DoorDash partnership, which means Kroger must manage two major external integrations at once.

For now, the setup is favorable. The company is leveraging existing infrastructure to capture a massive market, and the initial promotional push is designed to accelerate adoption. The real test will be whether this user acquisition can be converted into sustained, profitable growth, all while maintaining the operational reliability that grocery shoppers demand.