- In August 2020, DoorDash launched retail delivery with chains like 7-Eleven and Walgreens.
- Today, the No. 1 meal-delivery company in the US has more than 75,000 retailers on its app.
- Here are seven initiatives helping it take on grocery-delivery leaders like Gopuff and Instacart.
In 2019, DoorDash became the No. 1 meal-delivery company in the US, leapfrogging the then-market leader Grubhub. The delivery operator has remained at the top since, with a 59% share of the market, according to the latest data by Bloomberg Second Measure.
Lately, DoorDash has its sights set on a new prize — dominance in retail and grocery delivery. And with these new ambitions comes new competitors like Instacart and Gopuff.
DoorDash has leaned heavily into grocery, convenience-store, and retail delivery since launching these expanded services in 2020. Initial partners included 7-Eleven, Circle K, Wawa, CVS, and Walgreens. Two years later, in September, the company hit a milestone when it said its nonrestaurant partnerships exceeded 75,000 stores. These stores represent a wide variety of retailers, such as Sephora, Big Lots, PetSmart, Dick’s Sporting Goods, Target, Total Wine & More, and Office Depot.
“We’re very excited to have almost doubled the number of stores on our platform outside of restaurants,” CEO Tony Xu said at the Groceryshop conference in September. “We have more retail stores, grocery included, than any other platform in North America today.”
Well, it’s more like a tie.
Its rival Instacart has said it offers delivery and pickup services from more than 75,000 stores in North America and represents about 900 brands. Still, it’s taken the e-commerce giant much longer to scale than DoorDash. Instacart, which The New York Times said halted plans to go public this year, was founded in 2012.
The grocery and supply-chain consultant Brittain Ladd told Insider: “DoorDash is going to strangle Instacart using their own system. DoorDash understands that the way for them to become a major player in grocery fulfillment is by signing as many grocery customers as possible.”
Over the past two years, DoorDash has been adding retailers by offering them services such as rapid delivery, self-serve ad placements, and a built-in base of subscribers.
“We’ve taken businesses pretty much from scratch in these new categories of convenience, grocery, and other categories from zero into now $1 billion-plus scale businesses,” Xu told investors during the company’s 2021 fourth-quarter earnings report in February.
Wall Street and industry watchers are noticing DoorDash’s fast rise in the online-grocery sector, where sales reached $7.8 billion in September.
Robert Mollins, a Gordon Haskett analyst, said in an August note that DoorDash’s “new verticals” division was “quickly gaining momentum” as the company continued to reinvest “in the business to drive profitable growth for the long run.”
Andrew Boone, a JMP Securities analyst, said in a note earlier this year that DoorDash’s “user base” was highly engaged because of the variety of options on the app.
“While other sectors of our coverage universe have seen a reduction in demand with the reopenings, DoorDash’s greater selection, convenience, and value are proving resilient,” he said.
Here’s how DoorDash is building its business beyond restaurant delivery.
DoorDash has a self-serve ad platform for merchants and consumer-packaged-goods brands. DoorDash
Last year, DoorDash introduced self-serve ad tools for merchants on its site, including restaurants, convenience stores, and grocers. The ad platform allows merchants to target shoppers with sponsored listings and banner ads. These ads show up on search or the marketplace homepage. Earlier this month, DoorDash introduced a self-serve feature to its platform for consumer-packaged-goods brands.
DoorDash said its goal was to help CPG brands tap into its more than 25 million monthly active customers “to drive incremental purchases” from the stores now on its platform. From July 2021 to June, “we’ve generated more than $3 billion in sales for merchants through ads and promotions,” DoorDash said.
It added that these tools helped merchants and brands target and find new customers on the app.
“We’re focused on driving incremental revenue for our partners, and on average, see that more than 50% of orders generated from ads on DoorDash come from new customers,” the company said. “This was true for Clorox, who ran a recent campaign with us and saw that half of the customers who ordered products from their ads campaign did so for the first time on DoorDash.”
DoorDash is doubling down on retail media advertising in an increasingly competitive time.
Uber launched its own ad platform a few days after DoorDash’s announcement. Instacart debuted self-serve ads in 2020 and expanded the platform this week to include shoppable video ads for over 5,500 CPG brands. Kroger, which is building its own e-commerce platform, also sells advertising on its app and website brands.
In 2018, DoorDash jumped on the “subscriber-economy” bandwagon when it launched DashPass.
DashPass members get free delivery and discounted service fees on eligible orders for about $10 per month. In April, DoorDash offered DashPass at a discount, for about $5 a month, for college students. This year, DoorDash expanded its partnership with Chase, which offers various free DashPass memberships.
For the fourth quarter of 2021, DashPass membership grew to more than 10 million members globally.
Analysts say DoorDash’s membership program has given it an edge over rivals. Grubhub and Uber didn’t launch their free-delivery programs until 2020 and 2021, respectively.
DashPass subscribers play a key role in building relationships with nonfood merchants, as members tend to order more frequently, Nicholas Cauley, an analyst at Third Bridge, said.
The company has said 14% of DoorDash’s monthly active users ordered from categories outside food.
“DoorDash has one critical edge over Grubhub and other competitors — its user base,” Cauley said after DoorDash released its second-quarter earnings in August. “One of DoorDash’s best growth levers in the coming years will be to bring DashPass benefits to nonfood verticals.”
Drinks with DoubleDash was introduced on October 6. It allows consumers ordering a restaurant meal to add an alcoholic beverage from another merchant. DoorDash
A year after launching grocery delivery, DoorDash introduced DoubleDash. The feature allows customers to bundle deliveries from two different merchants, such as a local restaurant and a 7-Eleven. Bundling comes at no extra delivery cost for the consumer and shines a light on retailers on the DoorDash platform.
In early October, DoorDash added a bundling feature called Drinks with DoubleDash. It allows customers who order a restaurant meal to add alcohol from a local liquor store or wine shop.
From August 2021 to June, DoorDash said more than half of those using DoubleDash were ordering from merchants they’d never ordered from.
Alcohol delivery is a growing segment for DoorDash, whose main rival, Uber, bought the alcohol-delivery specialist Drizly in 2021. DoorDash began delivering alcohol in September 2021. From its alcohol-delivery launch through June, it had more than doubled the number of alcohol stores on the platform, with 130% store growth in the category, according to the company.
DoorDash’s direct-to-consumer grocery channel, DashMart, debuted in August 2020. DoorDash
DoorDash began third-party delivery partnerships with grocery stores in 2020. And that same year, the company launched a direct-to-consumer grocery division called DashMart.
DashMart competes with fast-delivery services like Gopuff, which have warehouses or “dark stores” throughout the US.
DoorDash has more than 25 DashMarts in the US and Canada, a company spokesperson told Insider, including in New York City, Chicago, Phoenix, Minneapolis, and Redwood City, California.
“Our goal with DashMart is to enable local merchants to sell their products online and through new distribution channels, not to compete against them,” the company said. DoorDash added that DashMart “does not compete with our third-party grocery partners.”
DoorDash offers express delivery in Canada through a partnership with Loblaws. DoorDash
Ultrafast and express delivery
Since December, DoorDash has launched three rapid-grocery-delivery experiments in the US and Canada, despite several ultrafast startups collapsing or downsizing operations.
In winter, DoorDash launched 15-minute delivery from a DashMart in the Chelsea neighborhood of New York City. Since then, it has expanded, with 10- to 15-minute deliveries across Manhattan and Brooklyn, a company spokesperson told Insider.
In February, DoorDash partnered with Albertsons to launch 30-minute delivery from 330 stores in more than 20 cities. Since then, DoorDash has expanded 30-minute delivery to more than 1,000 Albertsons-owned stores, such as Acme, Safeway, and Vons. DoorDash said it planned to scale across more locations through the end of the year.
In addition to Albertsons, DoorDash has launched express grocery delivery with Meijer and Hy-Vee. In August, DoorDash launched 30-minute delivery in major cities in Canada through a partnership with Loblaw. Canada’s largest grocery retailer supplies the goods, and DoorDash workers deliver the items from express fulfillment stores, including some DashMarts.
At the Groceryshop conference, Xu noted that DoorDash was known as the app that brings you lunch and dinner.
“But a big part of what we do, especially in grocery, is actually powering white-label deliveries,” Xu said.
DoorDash’s white-label service, DoorDash Drive, has been available to merchants since 2016. The service allows merchants to offer delivery through their digital channels, like restaurant apps. Restaurants like Chipotle and Wingstop were early adopters of DoorDash’s white-label logistics platform. Grubhub and Uber Eats didn’t offer white-label delivery until years later.
In 2018, DoorDash began testing last-mile delivery with Walmart, but the delivery operator ended that relationship earlier this year.
DoorDash said restaurants and grocers were the most common merchants leveraging DoorDash Drive. Some of its retail partners are Albertsons, Hy-Vee, BJ’s Wholesale Club, Loblaw, Wawa, PetSmart, Macy’s, Bed Bath & Beyond, Sephora, and Ulta Beauty.
Last year, DoorDash launched a program to deliver goods across the country from well-known food merchants like Carlo’s Bakery and flower shops like Bokay Flowers.
The next- or two-day deliveries are fulfilled by UPS or FedEx. By entering the space, DoorDash takes on the market leader, Goldbelly, backed in 2018 by the restaurateur Danny Meyer’s Enlightened Hospitality Investments.
About seven months later, Uber Eats launched nationwide shipping on its site.
Shanna Prevé, the vice president of business development at DoorDash, said the company’s mission was to be the one-stop shop for all local commerce needs for consumers.
“And that starts with bringing every business on Main Street online,” she said. “We are hyperfocused on selection, and we are excited about the progress we’ve made towards connecting every grocery, convenience, and retail store to every local consumer.”
DoorDash reports its third-quarter earnings November 3.