How online delivery is undergoing seismic shifts
The online delivery space is undergoing tremendous changes in a number of areas.
Efficient, timely delivery is the cornerstone of e-commerce. No matter how well a retailer’s digital commerce model is designed, if goods cannot reach customers in a cost-effective manner when they want them, the whole process collapses.
Retailers, and a variety of service providers, have been working on ways to streamline and refine the online delivery process for decades. But just in the past month or two, the space has seen a large amount of paradigm-shifting activity, including:
Instacart and Uber Eats unite food delivery
Food is the perfect online purchase. Customers don’t have to worry how a food product will fit them or look in their home, and the grocery, convenience and fast food verticals are already built around a streamlined shopping experience and often have delivery built into their business model.
This is why the third-party online delivery sector had its origins in delivering groceries and restaurant orders. But different platforms oriented themselves around either grocery (such as Instacart) or restaurant (such as DoorDash) delivery.
However, DoorDash began partnering with supermarket retailers in 2020, while Instacart has made some limited inroads into the restaurant vertical but mostly focused its category expansion into a wide variety of other non-perishable retail sectors. Until now.
Instacart is now providing its customers access to the hundreds of thousands of restaurants that deliver via Uber Eats, with Uber Eats and its couriers handling fulfillment. This turns Instacart into a grocery-restaurant juggernaut with a combined depth that not even DoorDash matches, while substantially boosting Uber Eats’ potential customer base.
The logical next step for DoorDash would be to partner with a grocery delivery platform, although none of the remaining providers have the same presence in grocery as Uber Eats does in restaurant. Presumably DoorDash will have some type of strategic response, which could set off an arms race in the world of online food delivery.
Ultrafast delivery proves ultra-difficult
Ultrafast delivery services focused on getting customers in densely populated urban areas in as little as 15 minutes or less began popping up in the U.S. a few years ago, but have mostly failed to gain traction.
Turkish ultrafast delivery platform Getir, one of the few major platforms specializing in this type of delivery that was still operating in America, recently exited the U.S. market (although its U.S. FreshDirect subsidiary will continue making deliveries).
Getir rivals such as Jokr and Buyk already shuttered operations in the U.S. in the past couple of years. In addition to difficulties in operating the model at scale with a profit, ultrafast delivery market is also being squeezed by the increasing speed with which delivery platforms such as Instacart and DoorDash, as well as Tier I retailers such as Amazon and Walmart, are fulfilling online orders.,
It's worth pointing out that Philadelphia-based Gopuff is a rare success story in the space. Gopuff based its model from the beginning on having a strong physical infrastructure of microwarehouses to fulfill orders quickly and affordably at scale, and continued this focus as it expanded with moves such as supporting its West Coast entry by purchasing the regional beverage retailer BevMo.
Gopuff proves that success in the digital space always falls back on a strong physical presence, and ultrafast delivery is no exception.
Drones cut through the noise
Retailers, brands and delivery platforms have long been piloting automated drones as a means of getting deliveries to customers that minimizes or removes the human element from the process.
But in recent months, these efforts have rapidly been gathering steam. Amazon, which first publicly introduced the idea of drone delivery in 2013, recently extended same-day drone delivery of prescription medication in New York City and the greater Los Angeles area, with plans to expand the service to more than a dozen U.S. cities by the end of the year.
Chief Amazon rival Walmart, which initially launched drone-based deliveries from three stores in Northwest Arkansas in late 2021, is now expanding a partnership it launched with Wing, an on-demand drone delivery provider powered by Google’s parent company, Alphabet, in August 2023.
And it’s not just Tier I retailers that are exploring the drone space. Regional pizza chain Jet’s Pizza will soon begin fulfilling online delivery orders with Zipline drones in select markets, starting in its headquarters city of Detroit. Each Zipline P2 drone is capable of delivering two large Detroit-style pizzas along with sides.
