Grubhub and Gopuff partner, bundling fast fulfillment operations

Instant delivery services are teaming up to put convenience store items alongside restaurant meals.

The news: Grubhub and Gopuff announced a partnership on Tuesday. Through this tie-up, the convenience store items kept at Gopuff’s facilities will be available on the Grubhub Marketplace. A pilot kicked off this week from select Gopuff locations in New York City, Los Angeles, Chicago, Boston, Philadelphia and Austin, and the companies plan to add more cities in the coming weeks. Eventually, products from more than 500 locations will be added to the Grubhub app.

What’s available?

• Quick fix: Offering delivery in under 30 minutes, Gopuff operates facilities that are stocked with thousands of items that are typically found at convenience stores, such as snacks, household items and grocery basics.
• Alcohol will be available for delivery in some cities.
• Virtual concepts from Gopuff for diners will also be available for ordering through Grubhub. This will include Gopuff pizza brand The Mean Tomato, Gopuff Liquor and virtual menus for brands including Unilever.

Key quote: "By combining our broad assortment, logistics network and infrastructure with the virtual storefronts of Grubhub, we can create more seamless one-stop shopping experiences for Gopuff's unparalleled one-stop shopping experience,” said Daniel Folkman, senior vice president of business at Gopuff, in a statement.

How they fit: Gopuff is known for quick commerce, a model that provides on-demand delivery of packaged goods. With restaurant delivery, Grubhub operates on similar timelines. So it makes sense that the companies can find a connecting point. Grubhub has also been expanding beyond meals recently, with a 7-Eleven partnership and the expansion of Grubhub Goods. So adding Gopuff’s offerings should allow it to expand the number of items it offers, and deliver on a timetable that is within expectations for its customers. Gopuff, in turn, can add reach to more customers through Grubhub. One question going forward is how appearing on another service will affect usage of Gopuff's own app.

Logistics lift: As Folkman’s quote indicates, this partnership goes beyond adding to the assortment available on Grubhub’s marketplace. Grubhub can also tap the logistics networks that enables Gopuff to deliver these items quickly. Gopuff’s facilities are essentially micro fulfillment centers stocked with many items for delivery, so it’s a different move for Grubhub than partnering with a more traditional retailer to deliver items from local brick-and-mortar stores. Gopuff also brings its own team for delivery. While the companies didn’t go into great detail about how these resources will be shared, it’s easy to see how combining these networks can create a force multiplier effect that enables the delivery of more items. It could be one example of Gopuff offering its logistics capabilities as a service to others who are seeking to adopt instant delivery.

Plusing up: With the launch, Gopuff will be available to members of Grubhub+, the subscription program that waives delivery fees and other perks. For Grubhub, there is incentive to add more convenience items. The company said that diners who order convenience items on Grubhub place more orders from restaurants in the following month than those who do not order convenience items.

It comes as both companies have been working to expand in recent months as their businesses face uncertainty.

Grubhub owner Just Eat Takeaway took a $3 billion writedown on the company in August, the Wall Street Journal reported. The British parent company is reportedly seeking a full or partial sale of the business, which trails Uber Eats and DoorDash in the meal delivery market. In a bid to add users in the meantime, Grubhub announced a partnership with Amazon to make Grubhub+ available for Prime members. The deal included a 2% stake in Just Eat Takeaway for the ecommerce giant.

Gopuff has been among the rapid delivery companies pulling back as the lifting of pandemic restrictions shifted consumer behavior, and the tightening investment market provided less fuel for the capital-intensive model. The company conducted two rounds of layoffs, including one in July that resulted in 1,500 people losing their jobs. It also closed 76 US warehouses, or 12% of its network. Yet it has continued to add to its offerings. This week, Gopuff launched a new private label health and wellness brand. Called Goodnow, it offers OTC medicine, electrolyte drinks, bandages and more. Building on the launch of the Basically brand earlier this year, it extends a strategy to offer its own products alongside the name brand convenience store items, just like many store-based retailers do. Gopuff also recently launched a retail media network, called Gopuff Ads, which extends advertising to both onsite and off-site capabilities through a partnership with CitrusAd.

For both companies, the partnership comes as delivery services are starting to broaden their offerings. DoorDash and Uber have both expanded from restaurant to delivery to offer convenience items, while Instacart is beginning to offer same-day delivery from stores like Lowe’s. Along with delivering quickly, the companies appear to be racing to offer the most complete service. Gopuff and Grubhub’s partnership indicates that the stage may also be set for a clash of fulfillment models beneath the surface.