Delivery app orders from US convenience stores such as 7-Eleven and CVS jumped 346 per cent in 2020, as pandemic lockdowns gave food-delivery companies an opportunity to expand beyond restaurants.
According to Edison Trends, convenience store sales were the fastest-growing segment of the third-party delivery app sector, ahead of restaurant growth, which rose by 112 per cent last year, and groceries, up 121 per cent.
DoorDash emerged as the dominant player in the US, with analysts pointing to its ability to leverage its leading position in restaurant delivery to steer users towards convenience goods.
After formally launching its convenience store service in April, DoorDash leapfrogged the previous market leader, GoPuff, in September, having already overtaken Uber Eats earlier in the year.
It now controls a 58 per cent share of spending nationwide, according to Edison, up from 5 per cent at the beginning of last year.
Convenience store sales are still a fraction of the third-party delivery app market, accounting for just 1 per cent of overall spend, according to Edison.
But according to PitchBook senior analyst Asad Hussein, DoorDash’s early progress is set to become increasingly lucrative as a growing number of the 165m daily transactions at convenience stores shift online.
“DoorDash has established a footprint in a very underpenetrated market that has a long runway of growth ahead of it,” he said. “If you’re a consumer, the things that you care about is: number one, cost. Number two is the speed. And number three is the overall experience. DoorDash is just absolutely nailing it on all three fronts.”
DoorDash, which went public late last year at a valuation of $60bn, is chasing profitability in 2021. The company lost $149m in the first nine months of 2020, according to its IPO prospectus, narrowing a $534m loss in the same period in 2019.
As part of its growth strategy in convenience, the company has opened 25 DashMarts, so-called “dark” stores that cater to online orders only — mimicking GoPuff, whose national market share it has eroded over the course of the year.
Philadelphia-based GoPuff, which is available in 500 cities, said its order volume had increased 400 per cent in the first half of 2020, and pointed to a strategy of exclusively using its own facilities to fulfil orders, rather than partnering with retailers, as DoorDash has.
Despite this, its national market share has dropped from 63 per cent at the end of January in 2020 to 24 per cent this month.
GoPuff said it had achieved profitability in every market where it has been operating for more than 18 months. In October, it announced a $380m funding round, at a $3.9bn valuation, to expand on that strategy. It recently acquired BevMo!, a leading alcohol retailer on the West Coast.
Among the smaller players in convenience stores, Edison’s most recent data, for January 2021, suggested Uber Eats had 8 per cent share — a figure that includes orders via Postmates, the app it acquired last year in a deal worth $2.65bn.
Without Postmates, Uber Eats’s share would be about 4 per cent, Edison said. Postmates had seen its market share of convenience stores drop from 14 to 4 per cent over the course of 2020.
A spokesperson for Uber would not comment on the Edison Trends data, but said its convenience store business had grown 14 times larger since 2019, and that folding in Postmates had doubled the number of convenience stores on its platform to more than 10,000 locations.
Instacart, which derives most of its revenue from grocery shopping at larger chains such as Walmart and Safeway, also had an 8 per cent share of sales from smaller stores.