DoorDash
- DoorDash is seeing a surge in non-restaurant orders from new customers, including grocery and flower deliveries.
- The delivery company has 100,000 retail stores on its app, surpassing Instacart's 80,000 merchants.
- "A lot of customers are coming to us for the first time, not for restaurants," CEO Tony Xu said.
Restaurant delivery juggernaut DoorDash is leaning into its three-year-old grocery business and consumers are noticing. The company said more new customers are turning to the app for non-restaurant orders as DoorDash has grown its retail selection to more than 100,000 stores.
"Already outside of the restaurant category, we attract more new customers that are ordering from these non-restaurants for the first time in the industry than any other platform," CEO Tony Xu told investors last week during the company's second-quarter earnings call. "And I think that's pretty remarkable, given that a lot of these categories for us only started about 2.5 years ago."
Outside of restaurant meals, consumers use DoorDash to buy groceries, pet food, office supplies, and flowers. That led to a surge in total orders for the quarter, which increased 25% year-over-year to 532 million. For example, DoorDash delivered 200,000 orders from flower shops on Mother's Day, setting a record for non-restaurant sales in one day.
"I think it's encouraging to see that, you know, we already attract more new customers into this field than anyone else and that a lot of customers are coming to us for the first time not for restaurants," Xu said on the call.
DoorDash was founded 10 years ago in a Stanford dorm room. It is now a juggernaut in the $123 billion food-delivery space, with over 500,000 stores on its app and a market cap of over $30 billion.
After winning the restaurant delivery war against Grubhub and Uber Eats, DoorDash began delivering groceries and convenience store goods in August 2020. It's been scaling quickly, adding dozens of national retailers such as Sprouts, Albertsons, Aldi, Target, Walgreens, 7-Eleven, CVS, Dollar General, Petco, PetSmart, Staples, Sephora, and Victoria's Secret.
Today, the company has 100,000 retail stores on its app, up from 75,000 a year ago. By comparison, its main rival, Instacart, founded in 2012, delivers from more than 80,000 stores across North America.
The percentage of consumers who start their journey on the app ordering groceries has been growing steadily and "reached a record high" in the latest quarter, DoorDash told Insider after the earnings call. About 17% of DoorDash's monthly active users order from categories outside food delivery as of the fourth quarter of 2022, the company said. That's up from 14% about a year ago.
Retail logistics expert Brittain Ladd said Instacart should be worried about DoorDash's growing retail business.
"DoorDash has implemented a multi-category strategy focused on restaurants, convenience stores, department stores, and grocery retailers," he said. "DoorDash has become Instacart's biggest threat due to their growth, technology prowess, and expertise in groceries."
DoorDash's push into groceries comes as Instacart filed confidentially to go public last year and has seen its valuation slashed amid a slowdown in e-commerce sales. In July, online grocery sales dropped 7% to $7.2 billion compared to July 2022 , according to the latest monthly Brick Meets Click/Mercatus Grocery Shopping Survey. Driving the downturn was delivery sales, which decreased 13.3% to $2.6 billion , according to the July survey released August 9.
Instacart recently frustrated its "shopper" network by cutting its minimum base pay to $4 from $7 per order. In June, DoorDash also changed how its couriers get paid. With tips and base pay, DoorDash couriers, on average, make $25 per hour on active deliveries, the company said.
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