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How DoorDash Is Scoring Gains in Grocery

Delivery platform posts higher orders, revenue during Q1
Lynn Petrak, Progressive Grocer
DoorDash grocery
Solid growth in grocery orders and expanded partnerships with food retailers underpinned DoorDash's first quarter performance.

DoorDash’s attempts at making new inroads in the grocery channel are paying off. The delivery company reported better-than-expected financial results for the first quarter, fueled in large part by growth in grocery orders.

Indeed, a robust grocery business is helping make up for lags in the restaurant side, as elevated inflation is leading many shoppers to continue eating at home. DoorDash experienced similar year-over-year (YoY) growth in its marketplace GOV (defined as the total value of marketplace orders completed across its logistics platform) in the first quarter as in the fourth quarter of fiscal 2023, with more than 100% YoY growth in the U.S. grocery category. Growth in the restaurant category declined slightly compared to the previous quarter.

Results in grocery mirror DoorDash’s ambition in that space. In March, the company expanded its partnership with Giant Eagle, offering services in more states across that retailer’s footprint, and began providing delivery from Rouses Markets stores in Louisiana, Mississippi and Alabama

This month, DoorDash teamed up with Wakefern Food Corp. for delivery service to customers at ShopRite, Price Rite Marketplace, The Fresh Grocer, Fairway Market, Gourmet Garage and Dearborn Market stores, and announced a new collaboration with West Coast retailers Vallarta Supermarkets, New Seasons Market, Haggen, Mother’s Market, and Jimbo’s. 

Also this quarter, the commerce platform expanded its SNAP/EBT payment option with several banners, including Acme Markets, Food City, Hy-Vee, Jewel-Osco, Kings Food Markets, Pavilions, Randalls, Shaw’s, Sprouts Farmers Market, Star Market, Stater Bros. Markets, Tom Thumb and Walgreens. 

According to its latest financial report, total orders on the DoorDash marketplace, including foodservice and grocery, reached 620 million during the quarter ending on March 31, up from 574 million in the prior quarter and 512 million in the Q1 of 2023. Revenue went up, too, rising 23% to $2.51 billion in Q1, outpacing the $2.45 billion estimate put forth by Wall Street analysts. 

In an earnings call, Co-Founder, CEO and Chair Tony Xu noted DoorDash has been successful in grocery in recent reporting periods because of its customer service mindset. “I mean I think, first and foremost, we think about it from the perspective of the customer and how they're going to judge us, right? And if you think about that, well, there are several factors. They're going to judge us based on what selection of retail offerings we give; certainly, the cost of getting fast delivery; as well as the quality of that delivery, both in terms of the timeliness, the accuracy and, especially with regards to something like grocery, whether or not we got exactly all of the items that they had specifically ordered in the condition that they would expect,” he said. 

[RELATED: DoorDash’s Impact Extends to Consumers, Independent Merchants]

Xu continued, “And so if you think about DoorDash's journey or evolution in that process, it started by really introducing a new use case, both to consumers as well as to grocers alike, which was this top-up use case, right, where we solve for the middle-of-the-week run, where the items in your pantry that you consume the most often or the items that perhaps may have perished the earliest, such as fruits or berries or milks or yogurts or coffees, things like this. We really started with that category. And that not only solved a consumer problem that wasn't being addressed in the market at the time, it was also an incremental occasion for retailers. And that's why we're seeing quite a lot of pull.”

San Francisco-based DoorDash connects consumers with their favorite local businesses in more than 25 countries across the globe. 

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