DoorDash is upping its sights with a revamp of its app.
DoorDash announced plans Tuesday to dramatically expand into every merchant category to put merchandise from local retailers within reach of consumers, as it prepares to launch a revamped app with new capabilities.
In the company’s 10-year evolution, it has grown from delivery at one restaurant to become a three-sided marketplace-and-delivery platform aiming to serve every business, said DoorDash cofounder and CEO Tony Xu at an online media event Tuesday. Its target is the small business interested in expanding by offering a delivery option through DoorDash. It also serves customers seeking delivered food and merchandise and drivers looking for deliveries.
Xu said DoorDash wants to give small Main Street merchants “the best chance of success,” by helping them with the logistics involved in e-commerce and delivery. In a letter to shareholders related to the company’s first-quarter financial results, Xu and Chief Financial Officer Ravi Inukonda said restaurant orders continue to command the vast majority of orders processed through DoorDash platforms. “We started in restaurants, and the majority of sales we have driven for local merchants to date has gone to our restaurant partners,” they said in the letter.
Now the San Francisco-based retail-tech company wants to branch out. DoorDash will be competing with Amazon.com on a local level for faster delivery of almost any kind of merchandise available at retail, according to the company.
Although DoorDash rolled out the DashMart online “convenience store” in 2020, restaurants have been DoorDash’s primary focus, not c-stores. While DoorDash has expanded rapidly, with the COVID-19 pandemic officially declared over and more consumers shopping and dining in person, it wasn’t clear from the media presentation whether DoorDash’s expansion will generate new interest from convenience retailers. 7-Eleven participates in DoorDash’s DashPass unlimited delivery subscription program, but many c-store chains don’t.
Convenience-Store Market
As Gray Taylor, executive director of Conexxus told CSP, delivery might not become a big part of most convenience stores’ revenue. They’ve invested in convenient locations often with fuel pumps, so they’re ideally situated for purchasing opportunities when consumers don’t need delivery. Their target customers are those going from one destination to another.
“I believe most of our sales are ‘on the way’,” Taylor said. Consumers stopping at convenience stores for a soda or fuel often are going somewhere else, he said. “It’s not a premeditated thing. We’re really, truly convenient, whereas grocery is premediated: I need this, this and this,” Taylor said.
Research from GasBuddy supports Taylor’s comment about fuel purchases. Despite efforts to encourage drivers to plan their fuel purchases ahead of time to save money, most don’t.
For convenience stores with demand for delivery but without the labor to execute on it, DoorDash might be a good option, assuming the Dashers doing the delivery are as careful as convenience-store employees would be about protecting the c-store’s brand image through the customer service they provide, Taylor said. But they aren't always, he said.
The cost of delivery has kept many consumers from ordering items from c-stores, Taylor said. Consumers who go to a convenience store for a pack of cigarettes and a soda might not want to spend an extra $6 for delivery, he said.
With COVID-19 over, “You’re going to start seeing a waning of home delivery for everyone except college students. They’ll pay $21 for a cheeseburger, fries and a shake delivered,” especially if their parents are paying for it, he said.
In another new effort to attract consumers, DoorDash will accept Electric Benefit Transfer payments from Supplemental Nutrition Assistance Program benefit recipients.
All-in-One App
Rajat Shroff, head of product and design at DoorDash, said consumers will like the ease of opening one app to purchase what they need when they need it from multiple retailers, and this form of convenience will bring more orders to local merchants.
DoorDash’s new app interface will make it easier for users to browse by product category and place orders using multiple carts at once. This new design feature will be useful for consumers as they build a grocery order over a stretch of time and decide they want to order a pizza for lunch immediately. Instead of abandoning their grocery carts, users will be able to start a second or third cart.
The company also is giving its Dashers more options for earning. The company has learned many Dashers want to earn money consistently from deliveries. DoorDash will allow them to opt in to “earn by time,” instead of earning by the offer or delivery order, said Cody Aughney, head of dasher and logistics. “They’ll earn a guaranteed hourly rate plus tips on top,” he said.
They also can earn as they drive to their assigned route and combine several deliveries in one trip, for example, by picking up from a retail merchant before heading to a restaurant.
The company also is changing its tipping options to allow users to provide post-delivery tips as long out as 30 days on the app. The new benefits are designed to improve the earnings of a DoorDash driver.
DoorDash also has plans to enter the rewards arena to encourage repeat purchases, the company said. This summer, 7-Eleven is participating in DoorDash’s Summer of DashPass by offering free Slurpees with a $5 purchase on Fridays from June 16 to July 16.