Friday, May 14, 2021

DoorDash Leads to Increase in U.S. Convenience Store Delivery Orders

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Orders for delivery apps at U.S. convenience stores such as 7-Eleven and CVS jumped 346% in 2020 as pandemic lockdowns gave food delivery businesses the opportunity to expand beyond restaurants .

Convenience store sales were the fastest growing segment of the third-party delivery application industry, according to Edison Trends, ahead of restaurant growth, which grew 112% last year, and grocery, in 121% increase.

DoorDash has emerged as the dominant player in the United States, with analysts highlighting its ability to leverage its leadership position in restaurant delivery to steer users toward convenience products.

After officially launching its convenience store service in April, DoorDash edged out former market leader GoPuff in September, having already overtaken Uber Eats earlier in the year.

According to Edison, he now controls 58% of spending nationwide, up from 5% at the start of last year.

Convenience store sales still represent a fraction of the third-party delivery app market, accounting for just 1% of total spend, according to Edison.

But according to senior PitchBook analyst Asad Hussein, DoorDash’s early advancements are expected to become increasingly lucrative as a growing 165 million daily convenience store transactions go online.

“DoorDash has established a footprint in a very under-penetrated market that has a long growth path ahead of it,” he said. “If you are a consumer, what is important to you is the cost. Number two is speed. And number three is the overall experience. DoorDash absolutely nails it on all three fronts. “

DoorDash, which went public late last year with a valuation of $ 60 billion, targets profitability in 2021. The company lost $ 149 million in the first nine months of 2020, according to its prospectus d ‘IPO, reducing a loss of $ 534 million over the same period in 2019.

As part of its strategy to grow in convenience, the company opened 25 DashMarts, so-called ‘dark’ stores that only respond to online orders – mimicking GoPuff, whose domestic market share has been eroding in the past. during the year.

Philadelphia-based GoPuff, which is available in 500 cities, said its order volume grew 400% in the first half of 2020, and highlighted a strategy of using its own facilities exclusively to fulfill orders, rather than partner with retailers, like DoorDash a.

Despite this, its domestic market share fell from 63% at the end of January 2020 to 24% this month.

GoPuff said it has achieved profitability in all markets it has been in for more than 18 months. In October, he announced a $ 380 million funding round, at a valuation of $ 3.9 billion, to develop this strategy. It recently acquired BevMo !, a major liquor retailer on the West Coast.

Among smaller convenience store players, Edison’s most recent data for January 2021 suggested that Uber Eats had an 8% share – a figure that includes orders through Postmates, the app it acquired from the last year in a deal worth $ 2.65 billion.

Without Postmates, Uber Eats’ share would be around 4%, Edison said. Postmates had seen its share of the convenience store market drop from 14% to 4% during 2020.

A spokesperson for Uber did not comment on the Edison Trends data, but said its convenience store business had grown 14 times since 2019 and folding Postmates had doubled the number of convenience stores on its platform at over 10,000 locations.

Instacart, which derives most of its revenue from groceries at large chains such as Walmart and Safeway, also achieved an 8 percent share of small-store sales.

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