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DoorDash is zeroing in on this ‘overlooked’ retail segment

New DoorDash partners are “staples in their community,” Fuad Hannon, VP of new verticals at DoorDash, told Retail Brew.
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DoorDash

5 min read

While it’s hard to avoid shopping at national chains for at least some groceries, consumers also ride hard for their local and regional grocers (any fellow New England Market Basket fans in the house?).

Fuad Hannon, VP of new verticals at DoorDash, believes this retail segment has been “overlooked” by other delivery platforms, while for DoorDash, it’s been a core focus area.

Last month, the company introduced a slew of new local grocer partnerships, adding to its marketplace of 500,000 local merchants: 11 locations of Minneapolis-St. Paul area grocer Kowalski’s; nine locations of California’s Mar-Val Food Stores; seven Geissler’s stores in Connecticut and Massachusetts; and six Miliam’s Markets locations in Miami-Dade. DoorDash also added grocery delivery at Wegmans across five states. This comes after the company onboarded eight local and regional grocery chains late last year.

DoorDash has had roots in local commerce through restaurant delivery since its founding in 2013, and now, as it continually evolves into a delivery company servicing all retail formats, grocery has played a huge role. The company has 7 million consumers buying groceries on the platform, and while it’s partnered with six of the top 10 grocers in the country, it’s also zeroing in on smaller partners.

“Today you think of DoorDash, and you can get Chipotle delivered, or Albertsons delivered, or Sephora delivered, the core of the business was going to small mom and pops and getting them to sign up for DoorDash,” he said. “That’s very much the core of the business and the ethos of the company.”

Thinking local: For consumers, DoorDash has found that grocery shopping isn’t a one-stop shop, as they tend to shop between four to five different grocers in a given month, Hannon said. Therefore, the company aims to have as many options as possible available to them on the platform, while also supporting its mission to “empower local economies,” he said.

“[Local and regional grocers are] really staples in their community,” he said. “They know their community super well. They have a relevant assortment, they have relevant merchandising, relevant pricing. And so we think there’s a really compelling opportunity to help these merchants come online.”

Of course, onboarding those local merchants is a different process than bringing on national retailers that might employ thousands of engineers. While those larger enterprises would likely already have their grocery catalog digitized and the two parties would just have to work to integrate their tech, for smaller grocers, DoorDash has sent people to stores to digitize their catalog and manually integrate with their POS system.

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“They’re all embracing it,” Hannon said. “Just the approach that we take to bring them online is really unique to what each merchant requires.”

Across all new retail verticals onboarded to its platform, between 75% and 90% of customers ordering are incremental, Hannon said. Consumers mostly still head to the app for restaurant delivery, so it’s presenting a selection of merchants and grocers they weren’t necessarily considering ordering online from, he noted. While online grocery orders tend to be less frequent and over $100, DoorDash is fulfilling a different use case—those “intra-week” runs when shoppers realize they’re short on a few key items, he said.

Being on DoorDash also boosts customer loyalty for both DoorDash and the local merchants, Hannon noted. When shoppers see a “loved brand” like Kowalski’s on the app, they recognize “there’s a lot of effort being done to bring these merchants online.”

“What gets, honestly, me out of bed every morning is that you’re keeping the money and the economic activity in the city,” he said. “It’s your local businessman…it’s your Dasher who lives in your city, and you’re keeping all the economic sort of activity in your community, as opposed to having it be shipped from 100 or 1,000 miles away.”

SNAP into action: Core to expanding into grocery has been accepting SNAP/EBT online payments, which the company has done since June 2023. The company currently accepts payments from 15,000+ locations, including leading grocers like Aldi, Albertsons and Safeway, and 7-Eleven, and in September added a number of local grocers including Minnesota and Wisconsin-based chain Jerry’s County Market and Jerry’s Foods, and Minnesota and Illinois’s Cub.

More than 1.8 million consumers have their SNAP cards linked to DoorDash, with 90% of its users having access to a merchant accepting them, Hannon said. It’s a win-win: Consumers who don’t have vehicles or live in food deserts get access to groceries, while merchant partners benefit by serving consumers in a different way, particularly those who might otherwise let those dollars go to waste. The “North Star” with this effort, Hannon said, is “giving [consumers] more access.”

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.