Three reasons Wonder may shake up online delivery
Delivery-focused restaurant company Wonder made a big step by acquiring Grubhub, and other online delivery platforms should take notice.
Since it was announced on Wednesday, Nov. 13, I’ve been pondering the impact of the Wonder-Grubhub acquisition. The fact that Wonder, founded by former president and CEO of Walmart U.S. e-commerce Marc Lore, spent $650 million to acquire on-demand delivery platform Grubhub from global online delivery conglomerate JustEatTakeaway.com should signal the company has some major plans in store.
Wonder’s current operating strategy is reminiscent of the ghost kitchen model, operating kitchens that offer delivery and in-location dining and pickup. The company has previously said it intends to grow from its current base of 28 locations to 35 by the end of 2024 and 90 by the end of 2025.
[READ MORE: Marc Lore-led food startup raises $700M; plans 90 stores by 2025]
Wonder said it is integrating Grubhub as part of its mission to "make great food more accessible" by combining first-party and third-party restaurants, groceries and meal kits in a single app order. But this acquisition also might be part of a concerted effort to reach a previously stated goal of being a “meal time super app,” but for more than just meal time.
Here are three reasons this move by Wonder may have significant implications for online delivery:
A shift toward brick-and-mortar
Wonder already has a growing retail infrastructure with its ghost kitchen stores that also feature some in-person business. In this respect it is similar to fast delivery platform Gopuff, which operates hundreds of micro-fulfillment centers servicing thousands of U.S. cities and also owns the BevMo liquor store chain.
Gopuff delivers immediate everyday needs it stocks in its dark stores, like Wonder delivers meals prepared in its ghost kitchens. However, Wonder’s recent hiring of Tony Hoggett, who ran Amazon’s global omnichannel grocery operation but also has experience with U.K. grocer Tesco and was instrumental in developing the Amazon Fresh high-tech grocery store model, suggests Wonder is looking to more fully flesh out the in-store retail side of its business. And not necessarily just the food service side…
Variety is the spice of life
Grubhub began as primarily delivering food from restaurants and convenience and grocery stores. But the company has been steadily expanding into niches such as pet products and office supplies. Wonder now instantly also has a presence in these verticals, along with the delivery infrastructure to fulfill orders.
Wonder has already developed a “sequenced” ordering systems that lets customers combine items from as many as 30 different restaurants in a single order. Extending this capability to include products from other Grubhub partners with a single checkout and delivery driver would be difficult, but also a game-changer (platforms such as Instacart and DoorDash allow some simultaneous ordering from multiple retailers, but not to this extent).
Wonder could also look at stocking its brick-and-mortar stores with inventory from its partners, similar to how virtual convenience storefronts such as DoorDash DashMart, Instacart Convenience Hub and even Grubhub Goods operate.
Instant infrastructure's gonna get you
Finally, acquiring Grubhub lets Wonder scale up to nationally compete with other leading online delivery platforms in one fell swoop. Grubhub partners with a total of more than 375,000 retailers in more than 4,000 U.S. cities, has an established roster of contract drivers, and also has a campus dining business that enables online ordering at more than 360 universities and a corporate accounts business that provides flexible meal perks platforms for more than 10,000 companies.
Integration will take some time, but this deal still turbocharges Wonder’s expansion to become a national competitor from its current base of operations in the Northeast U.S. There are a lot of unknowns with Wonder, but also a lot of possibilities to speculate.
