The Competition for On Demand Delivery

Last mile, on-demand, the sharing economy. Whatever you call it, the ability to order something from a local store and have it at your door within minutes (or hours) is surging. For a while, we had services isolated. Uber and Lyft for rides. DoorDash and Grubhub for restaurants. Drizly for alcohol. Instacart and Amazon for groceries. But now, the categories are expanding and the partners at play are shrinking. Uber created Uber Eats for restaurant delivery, integrating their drivers seamlessly into the process, then bought Drizly in 2021. DoorDash launched grocery in 2023. Now, Instacart is using Uber Eats to offer restaurant delivery in the Instacart app.

The competition to be everything is strong, and it makes sense. Once you hit market saturation, you have to expand services, products or audiences to grow. When Uber rideshare growth started to steady, Uber expanded to food. When Instacart growth steadied, they went after what they had untapped in food: restaurants.

But in a world where you can get groceries, restaurant and convenience delivered from multiple apps, who will survive?

Looking at the scale of DoorDash, it is clear why Instacart wants to get into the restaurant game. DoorDash has nearly twice the unique monthly visitors as Instacart. Uber Eats also wants a piece of DoorDash's share, which explains their willingness to partner with Instacart. But will all three survive?

The answer may lie with the retailers. The ability to order from your favorite grocery store on Instacart, or ordering same day on Ulta (fulfilled by DoorDash) holds a lot of the power in this dynamic. If a large retailer like Kroger were to start solely self-fulfillment, they could take many of their shoppers with them. There is a higher likelihood that this happens in the retail space vs. the restaurant space. So does that give DoorDash and Uber an advantage? Time will tell.

What do we do about all this duplication?

These on demand delivery apps are aggregators of retailers and restaurants, not retailers and restaurants themselves. For the advertiser, and for brands that sell at grocery supporting Retail Media Networks, it can be almost impossible to understand the true impact of your media on driving incrementality. We already struggle to understand the impact of our brand media, which for years solely drove the purchase funnel, combined with retail media that can now include CTV, Audio and Social. Throw in on demand delivery aggregators, heavily dependent on search for brand discovery and connected with many of our major retail partners. It's the closest to the consumer many brands have ever been - discovery to an order with a 30 minute delivery, yet more difficult than ever to know what drove that transaction.

The solution? It's critical to go into any of these platforms, not limited to on demand, with an incrementlity testing approach and comprehensive measurement solutions to understand individual media impact on total sales. Both of these will help marketers determine the most impactful platforms that ultimately convert their shoppers.

What about the consumer?

While apps and services grow by expanding their services, is that growth beneficial to the consumer? In the app boom of the 2010s, the apps that survived were built to solve a consumer need. So is there a consumer challenge here? Consumers do have choice in food delivery, rideshare and grocery. But consumers are also joining more and more subscription services, whether for streaming or delivery. Amazon Prime has over 200 million global members. Instacart, DoorDash and Uber all offer membership services that save consumers on certain delivery fees or offer other perks. If those fees start to expand for Instacart and DoorDash to include restaurant delivery and grocery delivery respectively, it could be beneficial to the consumer to only pay for one service. At the same time, Instacart, DoorDash and Uber are not Amazon Prime. Many of the users are not paying for premium subscriptions. In those cases, will the best price win?

Some perspective

Even with these on demand delivery apps making significant headways and testing into new services, it's important to remember that eGrocery is still only a fraction of the Grocery market. 330MM customers shop at Kroger monthly. Compare this to 23.5MM monthly unique Uber Eats and 29.1MM monthly unique Instacart visitors. Further, Walmart has its own delivery and fulfillment, and had 128MM online monthly unique visitors in the same time period.

Source: Comscore, MyMetrix, Key Measures, August 2024