Drivers are getting ready to rumble. That would be the intent of some on-demand delivery companies that are looking to grab market share among key retail sectors. And why not? The delivery aggregator business model of developing a network of product pickers and drivers can be transferrable across different verticals, and this is why competitors are looking to jump into new markets. For the most part, players like Instacart, Peapod, and Shipt ply the grocery store vertical, while DoorDash, Grub Hub, and Uber Eats cater to restaurant meal delivery. While delivery is still an expanding business, there is plenty of competition and rising costs, so scale and volume are ways to offset headwinds. The grocery delivery firms may have an edge since there is a higher degree of difficulty in selecting someone’s steaks, swordfish, and avocados compared with a ready-to-go restaurant meal. Consumers are winners here as there will be deals and discounts from both stores and delivery firms in the race to win new customers.
A Wall Street Journal article discusses more on this topic which is excerpted below.
Food-delivery companies are adding supermarkets and convenience stores to their order queues.
DoorDash Inc. and Postmates Inc. are among the companies striking deals beyond restaurants to expand their reach and revenue. In doing so, they face competition from rising food sales at Amazon.com Inc., from grocery-delivery specialist Instacart Inc. and from online supermarkets such as FreshDirect LLC and Koninklijke Ahold Delhaize NV’s Peapod.
U.S. consumers spend more on groceries than they do at restaurants on average annually, according to the Labor Department, making delivering groceries an opportunity for companies that have mainly focused on restaurants until now.
“We view food as the wedge,” Postmates Chief Operating Officer Vivek Patel said in an interview. Postmates said Wednesday that it would start making deliveries from 174 Walgreens and Duane Reade stories in Manhattan and Brooklyn. Postmates said it hopes to take the partnership with the owner of those chains, Walgreens Boots Alliance Inc., nationwide. Postmates also makes deliveries from Seven & i Holdings Co.’s 7-Eleven stores and Walmart Inc., the largest U.S. food retailer.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
