DoorDash debuts ultra-fast grocery delivery in NYC
DoorDash is making a foray into the ultra-fast grocery delivery market with a small pilot in NYC's Chelsea neighborhood.
Why it matters: Delivering purchases within 10-15 minutes is the latest trend in grocery delivery, so it's no surprise that established companies like DoorDash are trying to keep up.
- Last summer the company considered an investment in German delivery company Gorillas, with the potential option to acquire it down the line, though it ultimately didn't ink the deal.
The big picture: Ultra-fast delivery — already popular in other parts of the world like Europe — started to catch on over the past year or two as the pandemic limited in-person shopping.
- Grocery delivery company Instacart is also reportedly working on its own such service, per The Information.
Details: DoorDash customers within the new service's delivery radius can order items for a $1.49 fee and get them delivered by a courier on an e-bike from the company's DashMart warehouse.
- Similarly to rival services like Gorillas and Jokr, the couriers (and warehouse workers) for this service are employed by DoorDash via a new subsidiary called DashCorp. They earn $15 an hour (plus tips), along with standard benefits.
- "When we think about the offering of ultra-fast, 10-15 minute delivery, it's pretty intuitive that the independent contractor model… isn't well tailored to it," DoorDash global head of policy Max Rettig tells Axios.
- The company plans to expand to more parts of NYC in the coming weeks and months and eventually to other cities.
- It also plans to potentially provide ultra-fast delivery from third-party retailers such as corner stores.
Between the lines: This is a notable — but not surprising — departure for DoorDash which, along with other gig economy companies, has strongly defended the independent contractor model.
- The company poured $47 million into the campaign for a 2020 California ballot measure to exempt its couriers from a new state law.
- Because ultra-fast delivery requires that couriers and warehouse staffers be always available at a particular location, without the choice to turn down delivery requests, companies are opting to hire employees. They can require they undertake training, assign them shifts and uniforms, and so on.
- "We're committed to protecting independent work," says Rettig. "At the same time, we acknowledge that for some people, the predictability and consistency that comes with employment is something they want."
Yes, but: It remains to be seen if companies will be able to provide ultra-fast delivery profitably — especially if they need to cover the cost of employing couriers.
- Delivery margins are already slim, and companies have publicly admitted that the model only has the potential to work in dense cities in places where there's a high enough volume of orders.
Editor's note: This article has been corrected to show DoorDash's delivery fee is $1.49, not $0.99 to $1.99 as Axios was originally told.