Delivery Apps Bet on Next-Hour Commerce
DoorDash and Uber Seek Growth Avenues
DoorDash (DASH) and Uber (UBER) are making a bet on next-hour commerce as they look for ways to hold on to customers gained during the pandemic. Next-hour commerce means delivering products to consumers’ doorsteps in an hour or less.
Amazon (AMZN) pioneered next-day delivery. Now other companies are working to get in on the action. DoorDash and Uber will soon deliver a range of products from drugstores, liquor stores, and other businesses within an hour.
Non-Restaurant Orders to Boost Margins
Demand for Uber and DoorDash’s food delivery services surged during the pandemic. Analysts expect that consumers will stick to some of their online ordering habits even as the pandemic subsides. Uber and DoorDash hope to take advantage of this trend by continuing to offer food delivery and by starting to deliver a wider range of products.
Despite their rapid growth, both DoorDash and Uber have yet to achieve profitability. Groceries and alcohol deliveries tend to make delivery companies more money and offer better margins than orders from restaurants. The delivery companies can bundle groceries and other items with hot food, thereby lowering delivery costs.
Delivery Companies Partner With Retailers
Both DoorDash and Uber are seeing increased demand for non-restaurant deliveries. Last month, DoorDash increased its full-year estimate for the total volume of orders placed on its platform to $38 billion, up from $33 billion.
Meanwhile Uber said from the fourth quarter of 2020 to the first quarter of 2021, non-restaurant orders increased 70%. Among the retailers working with DoorDash are Macy’s (M), Petco (WOOF), and Walgreens (WBA). UberEats is teaming up with Gopuff, a delivery app which runs more than 400 warehouses, to keep DoorDash at bay. The past year and a half has been a roller-coaster ride for delivery companies. Now, they are working to respond to new market conditions with next-hour delivery offerings.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.