Delivery apps extend reach to meet customer demands

Accelerating the surge in consumer demand during pandemics, restaurant delivery companies such as DoorDash and Uber Eats are rapidly expanding their services to grocery stores, convenience stores, pharmacies, pet stores and even department stores.

On Wednesday, Uber Eats announced the latest delivery option, Flowers. Uber Eats will allow users to order flowers directly from the app as part of a partnership with FTD’s subsidiary ProFlowers. Flower delivery is first offered in New York, Chicago, Los Angeles, and several other US cities. It will be released nationwide by the beginning of next year.

“If we can deliver the burrito in 30 minutes, or if the ice cream can still be frozen and delivered, we should be able to deliver anything within an hour,” said Fuad Hannon, Head of DoorDash’s new vertical. “Technology makes it possible.”

Uber Eats and DoorDash are struggling to make a profit from the small profits they get from restaurants, and it’s important to extend beyond restaurant deliveries.

Alimo Garabi, Senior Equity Analyst at Morningstar, said restaurant deliveries could be profitable in a dense urban market where drivers can complete multiple orders in an hour. But outside of cities where delivery times are slow, adding orders from Walgreens and Costco can help you make better use of your driver’s time.

Offering more delivery items also attracts customers, many of which exceed the $ 9.99 / month charge charged by DoorDash and UberEats for unlimited deliveries.

Raj Beri, global head of grocery and new industries at UberEats, said the company experienced a large influx of users after the pandemic began, and many are still sticking to delivery as the pandemic declines. Said. To maintain them, it needs to offer the goods and services they value.

“More users are experimenting with these industries outside of restaurants. Their customers are more sticky on the platform,” he said. “Because they are more actively involved, membership will be more valuable to them.”

DoorDash and UberEats face fierce competition from well-established players such as delivery logistics experts Instacart and Amazon. According to Edison Trends, Instacart currently controls 67% of the US grocery collection and delivery business, and Amazon controls 22%. DoorDash and UberEats control 1% together.

In both Uber Eats and DoorDash, non-restaurant deliveries account for about 5% of sales. But the business is growing rapidly. DoorDash began partnerships with convenience stores such as Seven-Eleven in April 2020, and recently opened its own DashMart fulfillment center. According to Edison Trends, it is already a market leader in convenience store delivery, with a market share of 60%.

And from now on, there is a big chance. According to Beri, about 3 million customers order Uber Eats for non-restaurant deliveries each month, which has a total of 98 million active users worldwide. And Mogherabi estimates that by 2025 there will be $ 1 trillion worth of deliverables and services in the United States.

Delivery comes at a cost. The over-the-counter price of a gallon of milk in Meyer, Michigan is $ 1.68. For the DoorDash app, it’s $ 2.99. But so far, surcharges have not weakened demand. According to Uber Eats, non-restaurant deliveries surged 77% between the fourth quarter of 2020 and the first quarter of this year. Non-restaurant deliveries increased by 40% over the same period, according to DoorDash.

Cynthia Carasco White, a single mother and lawyer for a non-profit organization in Los Angeles, thought childbirth was a luxury she couldn’t get. However, she began delivering food, groceries and other necessities last year, thus avoiding taking her unvaccinated young daughter to the store.

White has come to see delivery as a lifeline that saves her time, gas and childcare costs. She uses a variety of apps such as UberEats and DoorDash, and uses trading when possible.

“We’ve seen how beneficial it is, so we’ll find a way to reduce costs and keep using it,” she said.

Delivery can also be costly to the store, depending on the service you are using. In some companies, such as Macy’s and Wal-Mart, customers order products on their website and use DoorDash for delivery. At other stores such as Seven-Eleven and CVS, Uber Eats and Door Dash drivers shop and deliver.

In some cases, it’s a mix. The grocery chain Albertsons recently signed a contract with DoorDash to deliver from nearly 2,000 stores in the United States. In some places, DoorDash drivers do the shopping and delivery. In other stores, Albertsons workers pack groceries and DoorDash is used only for delivery.

Albertsons fired many deliverymen earlier this year. The company says it was given at least some other work in the store. Amber Kappa, vice president of e-commerce at Albertsons, said the chain couldn’t keep up with the demand for digital orders and nearly tripled last year.

“If we don’t provide one to two hours of delivery quickly and almost free of charge, we don’t know how long it will last,” says Kappa.

For some companies, shipping companies are helping to eliminate expensive deliveries. Petco uses DoorDash to move heavy bags of Kibble and Kitty toilets to the customer’s front door. It’s much faster and cheaper than shipping.

Petco CEO Ron Cofflin said:

However, not all delivery drivers are happy with the expansion of deliveries.

Barbara Mensh of Rutherfordton, North Carolina, who drives both DoorDash and Instacart, said the business was booming in the early days of the pandemic. But lately, customers haven’t tipped very generously, and she often declines DoorDash orders. She doesn’t like buying goods in unfamiliar stores like Dollar Tree or idling at Wal-Mart while workers are preparing for delivery.

“Is this a $ 13 order that takes 45 minutes? That’s not a good value for your time,” she said. “It’s better to stay home and not use a car at all than to go out and work for peanuts.”

But Kweli Murphy of Inglewood, California, who drives both DoorDash and UberEats, says he’s happy with the job. 19-year-old Murphy bought his first car with an average delivery income of about $ 150 after six hours of driving.

Most of his deliveries still come from restaurants, but he sometimes buys orders in places like AutoZone and CVS.

“Going shopping for people is not a big deal. It’s just an opportunity to go to various places other than restaurants,” he said.

Delivery apps extend reach to meet customer demands

Source link Delivery apps extend reach to meet customer demands

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