What's going on?
US delivery giant DoorDash announced on Wednesday that it’s teaming up with Canada’s biggest grocery chain.
What does this mean?
The takeout business isn’t what it was during the pandemic, when the only glimmer of light in our imprisoned existences was a well-seasoned enchilada. Now, foodies – or at least foodies that can afford to in these belt-tightening times – are choosing to buy restaurant-quality food inside restaurants. That’s encouraged DoorDash to expand into the grocery delivery market, which it sees as ripe for major growth going forward. More specifically, the company’s aiming to develop a network of dedicated delivery warehouses, which will allow partners to fulfill more orders than they would if their drivers picked up the products from a store. And DoorDash has now found the first of those partners: it just signed an exclusive deal to build warehouses for Canadian grocery chain Loblaws that’ll see it handle 30-minute delivery for up to 8,000 products.
Why should I care?
Zooming in: The rivalry of the century.
The deal means DoorDash is now stepping on the toes of grocery delivery company Instacart, which used to be in an exclusive partnership with Loblaws. Expect this competition to continue: DoorDash is looking to make similar arrangements with grocery chains in other markets, while Instacart intends to make its own warehousing deals with some of the 750-odd retail partners it already has in North America. It’s not hard to see why: online US grocery sales are estimated to have topped $7 billion last month.
The bigger picture: DoorDash hits and hopes.
There’s a lot riding on this for DoorDash, given that investor confidence in high-growth tech businesses has collapsed. Just look at the company’s stock price, which has fallen nearly 60% this year alone. Still, if it’s able to successfully transition to a more platform-oriented business that offers logistics and warehousing, it could turn its fortunes around.