19 August 2022
Delivery platforms look beyond restaurants to local logistics
Platforms are building marketplaces, adding goods and standing up subscriptions.
Platforms are building marketplaces, adding goods and standing up subscriptions.
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 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.
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.
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.
The quick commerce marketplace is partnering with Rokt to expand beyond CPG advertising.
In some ways, retail media campaigns function like promotions in a brick-and-mortar store.
With retail media, brands can reach customers with advertising on the websites where shopping is taking place. This proximity to the point of sale provides an opportunity for brands who are already selling within a marketplace to take advantage of opportunities to elevate their position in search results, and stand out from a crowd of listings. This is the same goal that many brands have when they purchase highly-trafficked space in a store. But instead of checkout aisle and endcap placements, there are now sponsored products in search results.
But that’s not the end of the story.
The fact that retail media is internet-based and powered by first-party data collected at the purchase level is poised to open up new opportunities to reach consumers that go beyond today’s norms.
One such example is the introduction of non-endemic advertising. This allows brands that aren’t directly selling a product within a marketplace to purchase ad space.
Why would a brand want to advertise in a place where they can’t make a direct sale? The thinking goes like this: The marketplaces have the audience, and the data on them that allows for precise targeting. They can be places to learn about a new product, just as much as they can be a place to buy.
One early example of the recognition of the opportunity in non-endemic advertising arrived this month. The quick delivery marketplace Gopuff partnered with ecommerce technology company Rokt to enable brands outside the CPG category to advertise on Gopuff’s app.
Under the hood, the companies are combining machine learning technology from Rokt that is designed to present relevant offers to customers with a Gopuff audience that is made up of Gen Zers and millennials, engaged and curious about trying new brands.
The partnership will enable advertisers to target customer segments by demographic and location. Customers will also receive offers to try new brands, such as Hulu, AdoreMe and Noom.
What sets this advertising approach apart will be the consumer categories where it is focused. Typically, ads on Gopuff are focused around the convenience store items already available on the app. Now, shoppers will see other kinds of products in the mix, and they will click through to checkout pages that are outside Gopuff if they are interested in buying. This also has the potential to change how advertisers approach media spend. It means everyone from a sporting goods brand to a car company can now consider Gopuff as they plan. They must also consider how these channels work together as a whole.
"We are thrilled to partner with Gopuff and enhance its ad business, helping it move beyond the CPG category," said Elizabeth Buchanan, CCO of Rokt, in a statement. "By delivering relevant offers to Gopuff users, Rokt will help Gopuff Ads' brand partners across all categories create more meaningful customer connections and drive incremental sales."
The partnership underscores how retail media networks have three key building blocks for digital advertising: They’re a destination that people visit with an intent to shop, they have the audience that brands want to reach and they have data that can help to reach the right consumers.
It points to how ecommerce marketplaces can not only become the new store, but also emerge as ad networks like Facebook and Google before them. It’s a big reason why retail media networks have exploded over the last year, and why growth is forecast to continue to accelerate.