retail news in context, analysis with attitude

Bloomberg reports that restaurant delivery courier DoorDash has signed a deal with Walmart to deliver fresh food and grocery items to customers in Atlanta placing orders on Walmart’s site.

According to the story, the service “charges customers a $9.95 delivery fee on each order of at least $30 worth of goods. Customers can receive their purchases on the same day they order.”

Some context from Bloomberg:

“The market for grocery delivery has mainly been a race between Amazon and Instacart Inc., a heavily funded startup that has a delivery arrangement with Walmart-owned Sam’s Club. Last month, San Francisco-based DoorDash got a cash infusion of $535 million led by SoftBank Group Corp. The investment, which valued DoorDash at $1.4 billion, is being put to use on high-profile partnerships like the one with Walmart and a hiring spree, said Tony Xu, the startup’s co-founder and chief executive officer. This year, DoorDash expects to double engineering staff to 300 and sign additional retailers in the U.S. and Canada, he said.”

ZDNet writes: “The partnership is part of a mashup of delivery options Walmart has turned to as it works to expand its grocery delivery program to more than 100 metro areas across the country by the end of this year. The push will make Walmart's delivery service available to roughly 40 percent of US households, the retailer claims.”

In the same vein, Recode has an interesting story about how, while Walmart has developed a patchwork of relationships with delivery companies DoorDash, Postmates, Uber and Deliv, it seems likely that it won’t be doing business with Instacart anytime soon.

“The sticking point?” Recode writes that “Instacart wants Walmart to list its grocery items for sale on Instacart’s app, while Walmart simply wants to use Instacart delivery people to fulfill orders that flow exclusively through Walmart’s own digital properties.

“The arrangement preferred by Walmart would likely limit the financial upside for Instacart, which typically brings in revenue through commissions from grocers in exchange for generating new customer demand, in addition to delivery and service fees it charges customers who place orders through the Instacart app. If Instacart were to simply act as a delivery network for Walmart orders, it would have limited ways to make money. Such a relationship would also go against all the work Instacart has done to make its own app synonymous with grocery delivery by making sure all popular grocers list their grocery catalogues within the Instacart app. Walmart is the largest grocer in the U.S.”
KC's View:
I have to wonder if this is a kind of audition process, with Walmart looking for see if one of the delivery companies would be a nice fit for an acquisition.

The Recode piece really interests me, mostly because it reinforces a point that I keep trying to make here on MNB about Instacart.

Read this passage again:

“Such a relationship would also go against all the work Instacart has done to make its own app synonymous with grocery delivery by making sure all popular grocers list their grocery catalogues within the Instacart app.”

In other words, Instacart is interesting in building its own brand and business, not just in being a service provider to retailers and building their brands.

Getting into bed with these folks would worry me a bit.