Will DoorDash win the ultra-fast delivery race?

Discussion
Photo: DoorDash
Dec 08, 2021

One of the biggest app-based delivery services is offering customers in select markets a service that will get them their grocery orders even faster than usual.

DoorDash has announced that it will be offering ultra-fast grocery delivery with a new service in the Chelsea neighborhood of Manhattan, according to Axios. Customers in the delivery area can order products available in the DashMart warehouse and, for a charge of between 99 cents and $1.99, expect to receive them in 10 to 15 minutes. DoorDash will hire full-time employees at $15 per hour plus benefits for the service via a new subsidiary called DashCorp, rather than use their typical contract workers. Employees will carry out deliveries on e-bikes.

DashMart, which will facilitate the ultra-fast option, is a fairly new element of the DoorDash business model. It launched in the summer of 2020 in eight U.S. cities. While much of what DoorDash delivers comes from restaurants, convenience retailers and other stores in the markets it serves, DashMart warehouses hold an inventory of around 2,000 grocery items and essentials along with branded convenience and restaurant products.

Ultra-fast delivery has emerged as the next big battleground for delivery services with startups including Getir, Gopuff, Gorillas, Fridge No More, Buyk and Jokr offering orders within a 10- to 15-minute window.

DoorDash was eyeing Gorillas for a potential acquisition, but the deal did not go through, according to Axios.

DoorDash has recently made other new delivery options available to its customers as well. In August, it announced the launch of its DoubleDash feature. The feature allows customers to order from restaurants and order products from participating retailers — such as 7-Eleven, Wawa and Walgreens — to be picked up along the way and delivered along with their food order. DoorDash is also testing a program whereby customers receive special deals for ordering from more than one restaurant at a time.

While DoorDash is just moving into rapid delivery, others appear to be a few steps ahead. The venture-backed Gopuff, which received a $15 billion valuation in a funding round, partnered with Uber Eats to deliver convenience store orders through the more established service’s app.

DISCUSSION QUESTIONS: Do you think DoorDash’s ultra-fast delivery service will catch up to those who entered the market earlier? What will it take for DoorDash to differentiate itself in the ultra-fast delivery market?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"DoorDash can differentiate its service with hyper-local marketing, pervasive warehouse locations and service excellence."
"A plague on all their houses. As an infrequent restaurant delivery consumer, I still can’t get over how much these services get as their part of a takeout delivery order..."
"The service has been commoditized and so I believe this is a game of CAC and those who market the most will win."

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21 Comments on "Will DoorDash win the ultra-fast delivery race?"


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Dave Bruno
BrainTrust

As a very frequent grocery delivery customer, I am not sure I understand all the investment in ultra-fast grocery delivery. Ultra-fast restaurant delivery is a no-brainer, but how many times do people really need groceries within 15-20 minutes? I wish them well, but I am for now a skeptic of the entire ultra-fast grocery model. I am extremely bullish on the DoubleDash concept, however. I suspect many shoppers will find real value in that service.

Katie Thomas
BrainTrust

Especially in cities that are already densely packed and you can arguably find what you need within an hour or so anyways. And on that same note, how on earth does this model scale to non-dense cities…?

Dave Bruno
BrainTrust

Agreed, Katie. And, given that it’s tied to the DoorMart warehouses, it likely doesn’t ever scale to non-dense areas….

Neil Saunders
BrainTrust

I wonder how these companies intend to turn a profit. Most of their business models don’t stack up. And, in all honesty, how many people really need ultra-fast delivery? Sure, they’ll use it if it’s a subsidized service, but if and when prices increase, how many will stick with the option? These are questions that no one has answered convincingly.

Lisa Goller
BrainTrust

The race to our doorsteps is making grocery delivery more crowded, competitive and deliciously convenient.

DoorDash is already getting food to our homes; why not throw in some CPG products? It could catch up to rivals with its dark stores, army of delivery staff and competitive pay.

DoorDash can differentiate its service with hyper-local marketing, pervasive warehouse locations and service excellence.

Dion Kenney
BrainTrust
8 months 1 day ago

DoorDash’s “ultra-fast” offering is a compelling approach to last-mile delivery. It’s too early to say if it’s sufficient to give them the edge in a dynamically evolving part of the retail ecosystem. We can almost certainly expect others to find ways to respond in the short-term.

In the long-term, I expect to see business models and technology evolve to democratize delivery service and cost, owing to the availability of car/truck/van owners willing create a side-hustle of performing delivery services. This scenario will be possible when a platform company is able to offer order management and logistics planning a la UPS in a SaaS format at the community or neighborhood scale. It’s coming. Until then, many retailers and restaurateurs are paying a hefty percentage of revenues to last-mile delivery services.

Jennifer Bartashus
BrainTrust

DashMart has a potential competitive advantage over the existing niche players if it can attract shoppers from an existing pool of DoorDash users, which could make customer acquisition costs lower. And DoorDash’s core business helps provide financial stability to offset costs associated with rapid delivery. To win in rapid delivery, it will ultimately come down to having the right assortment of products, fees and ability to meet delivery windows consistently.

Bob Amster
BrainTrust

How slow is fast enough for grocery delivery? Does the world need “ultra-fast” grocery delivery? No.

Richard Hernandez
BrainTrust

Do we really need ultra-fast grocery delivery? I don’t think so…

Steve Montgomery
BrainTrust

Having, like Dave, been on the end of a cold restaurant meal from a delivery service, I can understand the appeal of ultra-fast meal deliveries. For grocery delivery my question is, what’s the rush?

Richard J. George, Ph.D.
BrainTrust

Terrific customer convenience, but at what price? Introductory, namely low pricing, may generate trial but subsequent pricing may not guarantee sustained usage. Without such a base, the long term profitability of this concept is suspect.

Christine Russo
BrainTrust

The service has been commoditized and so I believe this is a game of CAC and those who market the most will win. Retailers really should take advantage of the opportunities to partners with so many options because deal terms will be favorable in this current environment. Consolidation will happen for sure. My prediction is that DoorDash will be one of the survivors.

Gene Detroyer
BrainTrust

I think they are solving a problem that doesn’t really exist.

Peter Charness
BrainTrust

A plague on all their houses. As an infrequent restaurant delivery consumer, I still can’t get over how much these services get as their part of a takeout delivery order, and how reduced the share is that the restaurant owner receives as a result. Markup on each item — check. Service fee — check. Delivery Fee — check. Regulatory fee (which goes to no regulatory agency at all, read the fine print on that one) — check. Tip (which seems to be the only thing that goes to the poor driver) — check… And then the myriad marketing/service fees that the restaurant pays. And now they want to up-charge for getting you your food “hot” (oh right, the hot food delivery fee) — check.

Dion Kenney
BrainTrust
8 months 1 day ago

Agreed, Peter. “Ultra-fast” delivery sounds like a premium service until we recognize that pizza delivery has been “ultra-fast” and free for decades.

Dave Bruno
BrainTrust

Extremely well said, Peter!

RandyDandy
Guest
8 months 1 day ago

Unless it’s medicine to the gravely ill, there is nothing else in this world of ours that needs to be someplace ultra-fast. Sure, it’s an interesting notion: to see how fast that is. And there will be those who order “just to see” if they get their goods in an ultra-timely fashion.

But let me ask operations this: do you really want to cater to those with such self-centered, yet wholly unnecessary interests? Again, if this is about “life-saving” ideas, yes; but please not about getting your produce pronto!

Meanwhile, unless this is also about actual machines doing the work — like drones and bots — it’s a hellish predicament that’s certain to get worse for real workers. There is a matter of them being able to do things just so fast, and no faster. Plus, being able to do so, quicker and quicker, makes them only more like machines. And for sure the customers will only see them that way anyway.

What a vicious cycle, that keeps spinning more and more out of control.

Brandon Rael
BrainTrust

Aside from hyper-cosmopolitan cities, especially NYC, is there a need for ultra-fast grocery delivery services? While DoorDash has a very efficient operating model and has scaled significantly during the pandemic, this rapid and ultra-fast delivery service may be a race to the bottom that erodes grocer profit margins. The increasing fulfillment costs have to be consumed somewhere, and ultimately it will result in increased prices in an already inflationary economy.

It will all come down to execution for DoorDash, and if the ultra-fast delivery service achieves any economies of scale at a profit for them and their grocer partners, this could resonate. However the fundamental question is if there really is a pent-up demand for these services.

Shep Hyken
BrainTrust

Delivery is about convenience. Fast delivery is even more convenient. DoorDash is attempting to differentiate themselves with a higher level of convenience, and that may be what helps them be move competitive. Sure, there are others in the speedy delivery world, but DoorDash seems to have the plan and the money to execute a level of service that will get and keep customers.

Melissa Minkow
BrainTrust

Double Dash is exciting and makes great sense to me, as it’s rooted in convenience and keeps the shopping experience intuitive. The excessively speedy delivery just seems unnecessary. It’s like Prime 2-day shipping, consumers didn’t *need* or crave two-day delivery until Amazon taught them to. I fear that these moves are fostering the same “need” and will create a really competitive, margin-eroding, bad-for-the-environment standard.

Steve Dennis
BrainTrust

As Seth Godin reminds us (as quoted in my book “Remarkable Retail”), the problem with the race to the bottom is you might win. Or worse, finish second.

wpDiscuz
Braintrust
"DoorDash can differentiate its service with hyper-local marketing, pervasive warehouse locations and service excellence."
"A plague on all their houses. As an infrequent restaurant delivery consumer, I still can’t get over how much these services get as their part of a takeout delivery order..."
"The service has been commoditized and so I believe this is a game of CAC and those who market the most will win."

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