How Instacart, DoorDash, and Uber's Digital Strategies are Changing

Jamie Grill-Goodman
April 15, 2024
A DoorDash delivery person riding a bike

Third-party Delivery Services at a Glance

  • Third-party platform sales in March were up 15.2% compared to February
  • Instacart will release an API called Instacart Developer Platform (IDP)
  • DoorDash launches drone delivery partnership in the U.S. with Wendy’s
  • Uber launches autonomous Uber Eats deliveries via Waymo vehicles
  • Almost three in four U.S. grocery retailers name cost of logistics/delivery a challenge in increasing digital profitability

Overview of Strategic Advancements in Third-Party Delivery Services

Leveraging third-party delivery services has become an essential success strategy for grocers. Grocery Doppio’s latest State of the Digital Grocery Performance Scorecard, finds third-party sales in March 2024 were 14.6% of digital grocery sales.

While grocers tap these resources for order fulfillment, top third-party delivery services Instacart, DoorDash, and Uber continue to refine their own digital strategies. Recent efforts are paying off, Grocery Doppio finds, as third-party platform sales in March were up 15.2% compared to February. Here’s a look at how each company is evolving to stay competitive and meet evolving consumer demands.

Instacart Unveils Developer Platform & Expands Smart Cart Deployment

Founded in 2012, Instacart has focused on improving its app interface, streamlining the ordering process, and enhancing the user experience. In March, it revealed the company would release a public application programming interface (API), called Instacart Developer Platform (IDP). The publicly available program will enable third parties to integrate the functionality of Instacart inside their websites and apps.

“With the launch of the Instacart Developer Platform, we’re taking over a decade of technology we’ve built to power the Instacart marketplace and top retailer storefronts, and offering it to a broader range of businesses, turning discovery-centric apps into full-service experiences that can also deliver tangible goods,” said Daniel Danker, Chief Product Officer and Head of Online Grocery at Instacart. “This enables mainstream services as well as new products born out of emerging AI capabilities to offer truly complete experiences for their customers.”

The company has also been expanding availability of its AI-powered Caper Carts inside member retailers’ stores. Associated Wholesale Grocers (AWG) was the most recent to announce it would offer Caper Carts to its own member retailers, enabling more direct access to same-day delivery and the smart carts to AWG member companies across 3,500 locations in 32 states.

When asked during its recent earnings call how the company’s customer accusation strategy is evolving, Instacart CEO Fidji Simo responded, “We partner with our retailers so that our retailers can also market to their customers, because of the very clear data showing that the omnichannel customer is 2x to 4x more valuable than the in-store-only customer.” Of U.S. grocery retailers, 66% say the biggest challenge in increasing digital profitability is the cost of customer acquisition. But retailers have an incentive to persuade their customers to be omnichannel. In addition to adding customer value, digital profitability has improved for 23% of U.S. grocery retailers.

DoorDash Enhances Delivery Options with Drones & Expands SNAP Access

DoorDash launched in 2013, and as CEO Tony Xu put it during DoorDash’s most recent earnings call, “we're investing in all the dimensions in which a consumer judges us.”

This includes adding selection to the platform, partnering with more retailers, getting better at customer support, and improving quality of the service and affordability. Cost of picking/fulfillment was the top challenge in increasing digital profitability for retailers (83%).

Looking ahead, grocery stores may see drones fulfill DoorDash orders in the future. In March, the third-party delivery service announced the launch of its drone delivery partnership in the U.S. with Wendy’s, starting in Christiansburg, VA. The move follows its Australian drone delivery pilot program with Wing.

“We’re optimistic about the value drone delivery will bring to our platform as we work to offer more efficient, sustainable, and convenient delivery options for consumers,” said Harrison Shih, Senior Director of DoorDash Labs. For now, eligible DoorDash customers that select drone delivery will have their orders prepared and packaged at the Wendy’s location and delivered via a Wing drone, typically in 30 minutes or less.

Another new strategy for DoorDash is expanding access for SNAP customers. Since launching support for SNAP/EBT payments in 2023, over 1.1 million consumers have added their SNAP/EBT cards to DoorDash. In March, the company partnered with an additional dozen new grocers across the country. With the addition of these new partners, over 6,000 locations nationwide will now support SNAP/EBT payment capabilities on DoorDash for delivery of eligible grocery items.

Uber Advances in Autonomous Delivery & Multi-Store Ordering

Originally a ride-hailing service launched in 2009, Uber expanded to include food delivery in 2014 with the launch of Uber Eats. To strengthen its digital strategy, Uber expanded its reach last year when it introduced multi-store ordering, a feature that allows customers to order from a second establishment in the same session, without paying an additional Delivery Fee. For example, a customer wants Thai for dinner, but the kids want pizza — now they can build a digital cart from multiple Uber Eats merchants and have all items delivered together.

Additionally, Uber has been investing in autonomous driving technology to reduce costs and improve efficiency. This April, after a successful partnership with Waymo providing autonomous rides in Phoenix, AZ, the company launched Uber Eats deliveries via Waymo vehicles. Uber Eats consumers in Tempe, Mesa, and Chandler can now have their orders delivered by an autonomous vehicle. The launch includes select merchants in the area like Princess Pita, Filiberto’s, and BoSa Donuts.

Uber’s autonomous strategy will be one to keep an eye on as the technology becomes more widespread in the future. CFO Prashanth Mahendra-Rajah reminded analysts during the company’s most recent earnings call that Uber provides automotive liability insurance on behalf of its drivers and builds that into its pricing, a “space that has been facing significant cost pressure.” While autonomous vehicles don’t pose a solution to this now, this may be the beginning of an important strategy shift for Uber into the future. Almost three in four U.S. grocery retailers named cost of logistics/delivery (73%) a challenge in increasing digital profitability.