DoorDash Says Built-In Audience Gives Grocery Business Advantage Over Instacart

DoorDash is leveraging its existing audience to acquire eGrocery customers in the face of competition for consumers’ delivery spending.

The United States’ leading aggregator stated on its earnings call Wednesday (Nov. 1), when asked about how its grocery business is faring in the aftermath of Instacart going public, that its built-in consumer base and labor infrastructure gives DoorDash the leg up.

“We have a strategic advantage because we have a network of consumers; we have a network of dashers already built out, and that’s allowing us to improve unit economics at a much faster pace,” the aggregator’s Chief Financial Officer Ravi Inukonda said, noting that the grocery business’s gross order value (GOV) has doubled relative to last year.

That said, CEO Tony Xu added that the company has not been heavily marketing its grocery business, in part because existing platform engagement from the restaurant business is making it easier to acquire new customers, but also in part because the grocery delivery business has room to improve.

He noted that, for some time, the company’s grocery business “wasn’t good enough” to merit the marketing investment, and while the business has improved considerably, there remains “a long ways to go.”

As far as competition from Instacart, DoorDash certainly is the larger business. Instacart’s revenue amounted to $2.6 billion in 2022, while DoorDash’s was nearly three times that, at $6.6 billion.

Meanwhile, when it comes to the core restaurant business, DoorDash has plenty of opportunities to boost adoption, given that aggregators account for only a small percentage of total orders. Xu noted in a letter shared with investors that, while this low penetration corresponds to significant market opportunity, the high amount of competition in the space makes it difficult to seize on that chance. 

“Although consumer penetration in our markets remains relatively low, consumers have tremendous choice and are extremely demanding, which means we must earn every consumer we attract and every order they place,” Xu said. 

The latest installment of the PYMNTS Intelligence Connected Dining series, “Tracking the Impact of Digital Tools on Food Tourism and Travel Preferences,” which drew from a September survey of more than 2,000 U.S. adults, noted that only 4.4% of consumers report using aggregators for their latest restaurant purchase.

Still, for DoorDash, engagement is on the rise. The company shared in its earnings report that total orders grew 24% year over year in the quarter to 543 million, with GOV rising to $16.8 billion. 

DoorDash continues to be a leader in the aggregator space. PYMNTS’ Provider Ranking of Aggregators, which ranks leading platforms with a proprietary algorithm that accounts for factors including usage, downloads and channel coverage, continues to hold the San Francisco-based delivery service in the top spot by a comfortable margin. DoorDash’s score of 96 places it at the top of the list, outranking runner-up Uber Eats’ 92 points and is seating it higher than third-place player Zomato’s 87.

“Almost half of new customers that come into the industry in the U.S. come to DoorDash first,” Xu said.

PYMNTS Intelligence surveys for the Connected Dining series revealed that, as of June, 77% of aggregator users reported that they were DoorDash customers, while only 49% of aggregator users said the same of Uber Eats and 35% of Grubhub.