With Walmart deal, DoorDash is the latest entrant in the grocery delivery cage match
- Walmart announced it has partnered with DoorDash to offer home delivery to customers in Atlanta, according to a news release. This is the first grocery deal for DoorDash, which had previously delivered just for restaurants, and brings it into competition with Instacart, Shipt and other supermarket e-commerce services. Walmart indicated it will partner with DoorDash in additional markets beyond Atlanta, though did not specify what those markets would be.
- DoorDash drivers will gather orders assembled by Walmart workers, then deliver them to customers within a specified time window. The company’s chief operating officer, Christopher Payne, said it is offering a white-label service to Walmart, meaning drivers won’t wear DoorDash gear. “If you go to Walmart.com, and order from Walmart in Atlanta, you’ll have no idea it’s from DoorDash,” he told TechCrunch. “We’re very supportive of that scenario.”
- Earlier this month, Walmart announced a deal with Postmates to offer home delivery in Charlotte, North Carolina. The retailer also offers delivery through Deliv and Uber Eats. By the end of this year, Walmart plans to offer home grocery delivery in 100 cities, covering 40% of all U.S. consumers.
When it comes to grocery home delivery, Walmart has shown it prefers to handle order assembly itself, then outsource the last mile to third-party providers. This approach lets it control order quality and cross-utilize employees for store pickup and delivery. It also allows the mega retailer to save money on the most expensive leg of the e-commerce journey.
Walmart likely squeezed a good deal out of DoorDash, which is all too happy to enter the grocery delivery market. Although e-commerce only makes up a small fraction of supermarkets’ sales today, consumer demand is accelerating and set to hit 70% penetration in as little as four years, according to the Food Marketing Institute and Nielsen.
DoorDash wants to ride this wave, and so do other on-demand delivery services. As DoorDash’s chief operating officer Christopher Payne told TechCrunch, grocery deliveries nicely complement their other services. A lot of orders come early in the day, he said, when most drivers aren’t busy making restaurant runs. DoorDash also no doubt wants to gather valuable data on grocery shoppers.
This puts pressure on Instacart, which raced to a commanding lead last year in end-to-end grocery fulfillment, but whose dominance is anything but assured. If DoorDash, Postmates and other providers can prove their value under Walmart, they could forge partnerships with additional grocers.
Instacart does have one big advantage over these last-mile delivery services: Its ordering platform. Investing in this platform is a major priority this year, chief business officer Nilam Ganenthiran recently told Food Dive. But more grocers may adopt Walmart’s approach if it’s successful, and as their involvement in e-commerce evolves. Kroger, for one, already has workers at hundreds of stores assembling orders for its ClickList pickup service, and has tested Uber Eats delivery in various markets.
Instacart does offer online ordering and delivery for Walmart’s Sam’s Club division, so why hasn’t Walmart done the same? According to Recode, Instacart wants to offer Walmart products on its website, while the retailer just wants delivery.
As online grocery grows, look for more third-party services to enter the online grocery fray. It’s anyone’s guess at this point which company will see the most gains, and if Instacart can hold on to its lead. But one thing seems increasingly certain: Walmart is going to make a killing during all the commotion.
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