Operations
19 August 2022
Delivery platforms look beyond restaurants to local logistics
Platforms are building marketplaces, adding goods and standing up subscriptions.
(Illustration by the Current)
×
The Current, delivered daily.
Ecommerce news, right to your inbox.
Sign up for our email newsletter.
Subscribe.sticky-cta-wrapper {
width: 100%;
position: fixed;
bottom: 0;
left: 0;
background-color: var(--black);
}
Subscribe to The Current newsletter
Ecommerce stretches across three distinct surfaces: There are those that attract customers, those that facilitate browsing and buying and those that get items to customers.
In the latter, delivery is the crucial, final piece that gets the package to a person’s door. It’s also a part of the process that is less likely to be handled by a brand or retailer themselves. After all, carrier services such as USPS, FedEx or UPS is built to handle and deliver packages. There’s also Fulfillment by Amazon, which offers links to storage, and delivery through its own vast logistics network. Or, one can contract with a third-party logistics firms to move items.
The headlines this year show how another option is emerging, and this week is no exception. Firms that started by standing up services to deliver meals from local restaurants are also recognizing something fundamental about their businesses: They have large groups of delivery drivers, software that helps to route them and defined processes for moving goods. Plus, their drivers are often third-party contractors, just like Amazon’s.
In other words, DoorDash, Uber Eats and GrubHub are sitting on logistics businesses that could deliver many kinds of items, even if people are only used to seeking them out for a quick bite from the Thai restaurant down the street.
Especially after a pandemic ecommerce boom that grew demand for delivery, these businesses have recognized their opportunity here. They’ve added to their assortment of items beyond food to the assortment of offerings on their apps, started behaving more like retail platforms that become a place to buy goods, and made moves to improve the shopper experience through new features and loyalty.
Partnerships are a big path through which they are unlocking this. A series of tie-ups this week shows how these delivery companies are looking to grow what they offer:
Facebook Marketplace x DoorDash
Facebook Marketplace started as a Craigslist-like peer-to-peer marketplace, where buyers and sellers had to make their own arrangements to exchange items. Through a developing new partnership with DoorDash, Meta is seeking to add a delivery service for smaller items to the equation.
According to the Wall Street Journal, DoorDash is testing a service in several US cities that will deliver Facebook Marketplace items that fit into the trunk of a car up to 15 miles away within 48 hours. Techcrunch adds that the service is under DoorDash's B2B service, called DoorDash Drive, which delivers for other merchants. With the move, Facebook is seeking to ramp up offerings for Marketplace as it seeks to attract younger users to the platform. Facebook Marketplace does have a partnership with on-demand service Dolly, but that is only for larger items and is available in just 45 cities.
While it is pursuing work with Meta, DoorDash is reportedly exiting another partnership. According to Business Insider, DoorDash is planning to end a partnership with Walmart that delivered groceries and other items to customers after four years. A source told the outlet that the partnership was “no longer mutually beneficial.”
This may be more about Walmart entering the delivery space in a bigger way than DoorDash’s particular interests. Walmart has been building out its own network for delivery, called Spark, which also includes a white-label delivery service that businesses can tap. Also on Friday, Walmart acquired Delivery Drivers Inc., which is the company that built the platform that runs Spark’s gig worker network.
Uber Eats x Office Depot
Add school supplies to the Uber Don’t Eats list. This week, Uber Eats inked a partnership with Office Depot that will see the service deliver supplies from 900 Office Depot and OfficeMax locations across the country.
This comes during the back-to-school season, which offers the opportunity to build in savings. Members of Uber's subscription service benefit from a $0 delivery fee and 5% discount on all Office Depot orders with a $15 minimum purchase.
This partnership shows how meal delivery platforms are looking to deliver for retailers, as well as restaurants. Even as Uber Eats is planting a flag around local commerce, GrubHub and DoorDash are both adding more and more goods beyond food, as well. It also signifies how the meal delivery platforms are all starting to look more and more like each other even as they expand. DoorDash, for instance, already has a partnership with Office Depot to deliver office supplies. As offerings offer similar items, the difference will come down to the experience shoppers have with the service.
Grubhub x Bank of America
Along with offering delivery, these services are also adopting similar strategies to ecommerce platforms as they seek to build loyalty. This includes the introduction of subscription programs that offer perks, taking a page from the Amazon Prime playbook.
Partnerships bring opportunities to find new avenues for growth of these programs, thereby increasing orders on the platform from repeat customers. That’s on view in a new link between Bank of America and Grubhub. It is providing Bank of America cardholders with free membership to Grubhub+ for a year. Grubhub+ offers unlimited $0 delivery fees.
“This is truly a win-win, with Bank of America now rewarding cardholders with deals and perks from restaurants they will love, and Grubhub tapping into Bank of America’s loyal and vast customer base to drive even more orders to restaurant owners and drivers,” said Launika Raykar, vice president of loyalty at Grubhub, in a statement.
The perk helps Bank of America offer a digital benefit for its members, while Grubhub has an opportunity to introduce more users to the service. It follows a similar deal that Grubhub inked with Amazon to offer the Grubhub+ service to Prime members for a year.
Separately this week, Uber said it will later this year end its free Uber Rewards program, which allows users to accrue points. Instead, it is emphasizing Uber One, a subscription program that brings together benefits for rides and delivery. It offers $0 delivery fees, 5% off rides and 10% off delivery orders.
The partnerships show the beginnings of flywheels beginning to form at these companies. Growing the items offered makes membership more attractive, while perks increase the value of membership and in turn lead to more sales from an ever-growing selection of options.
Subscribe to The Current Newsletter
SubscribeTrending in Operations
Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
Keep reading...Show less
Loading...
Subscribe to The Current Newsletter
SubscribeLatest from Operations
.sticky-cta-wrapper {
width: 100%;
position: fixed;
bottom: 0;
left: 0;
background-color: var(--black);
}
Subscribe to The Current newsletter