DoorDash’s aggressive push into the grocery space continued Monday when it announced a deal with Grocery Outlet Holding. DoorDash will provide delivery service through its DashPass service.
Based in Emeryville, California, Grocery Outlet (NASDAQ: GO) provides grocery items to 420 independently operated stores in California, Washington, Oregon, Pennsylvania, Idaho, Nevada, New Jersey and Maryland. The company serves 1.5 million shoppers each week.
“Our partnership with DoorDash will help save shoppers time and money,” said Grocery Outlet CEO Eric Lindberg. “In addition to bringing more of our great products direct to consumers, our DoorDash partnership will help Grocery Outlet reach more customers with great prices during a time where every penny counts.”
Grocery Outlet said 398 locations will be part of the program.
DashPass is DoorDash’s (NYSE: DASH) membership program. For $9.99 a month, DoorDash waives delivery fees on eligible orders of $35 or more. These include orders from restaurants, grocery and convenience stores.
“DoorDash is committed to providing customers with all the selection they crave at affordable prices in a way that’s convenient for them and their families,” said Shanna Prevé, vice president of business development at DoorDash. “As consumers face rising prices, we’re thrilled to partner with Grocery Outlet to provide consumers across the country with a new way to purchase more affordable groceries while maximizing their budgets. With this partnership, consumers can find and enjoy even more affordable grocery selection on our marketplace.”
The partnership with Grocery Outlet is the latest in a series of moves as DoorDash tries to gain market share in the grocery delivery space. In early August, the company announced a deal with Associated Wholesale Grocers (AWG) to provide on-demand grocery delivery services to independent food retailers. Customers at participating stores can order groceries through the DoorDash app.
AWG boasts over 1,000 member companies with more than 3,400 locations in 31 states.
DoorDash also recently signed deals with Schnuck Markets, which operates 112 stores in four Midwestern states, and Food City for delivery from 117 of its 138 stores. In February, DoorDash launched an express grocery delivery service with Albertsons Cos. (NYSE: ACI). That program enables delivery of more than 6,000 items such as produce, dairy, eggs, snacks, frozen foods and packaged goods in under 30 minutes at participating Albertsons Cos. locations. These include Safeway, Vons, ACME Markets, Jewel-Osco and Tom Thumb in more than 20 cities.
Still, DoorDash maintains a low penetration rate in an online grocery market that is expected to reach $2.1 trillion by 2030. Data from Bricks Meets Clicks found July online grocery sales in the U.S. increased 17% on a year-over-year (y/y) basis to $7.8 billion. Delivery expanded 5% y/y and held 34.2% of the online grocery delivery market.
“Based on third-party data, we estimate our business currently addresses global markets with more than 300 million households and 750 million people, total restaurant spend of over $1 trillion and total grocery and convenience spend of over $2.5 trillion,” DoorDash said in a shareholder letter accompanying the earnings. “Based on those estimates, we believe the Wolt and DoorDash Marketplaces currently represent just 5% of restaurant spend in these markets and well under 1% of convenience, grocery and non-food spend.”
The company said it believes it has a “large opportunity for growth” in the space.
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