DoorDash on Wednesday announced the launch of a chain of virtual convenience stores the company is calling DashMart, which will sell snacks, groceries, and other food-related products from partner restaurants. These stores don’t have brick-and-mortar locations. Instead, they exist solely on the DoorDash app, kind of like a ghost kitchen if it were a CVS or 7-Eleven instead.
Right now, the company says DashMart is available in eight cities in the US: Chicago, Illinois; Columbus, Ohio; Cincinnati, Ohio; Dallas, Texas; Minneapolis, Minnesota; the greater Phoenix, Arizona area; Salt Lake City, Utah; and Redwood City, California. But DoorDash is planning to expand that to more locations in the future, starting with a broader rollout in California and the inclusion of Denver and Baltimore to its list of supported city markets.
According to its press release, these DashMart stores are “are owned, operated, and curated by DoorDash.” That may sound like a strange new business model for DoorDash, which specializes mostly in coordinating the pickup and delivery of takeout. But the company clearly sees a big market opportunity in being the logistical partner and provider for other types of food delivery, not just freshly made meals.
DoorDash wants in on the grocery and convenience markets, so it’s starting its own store
DoorDash already supports convenience stores like 7-Eleven, CVS, and Walgreens, letting you create a shopping cart of items from those locations for a DoorDash driver to pick up and deliver. And there’s plenty of money to be made in the convenience store and grocery markets that on-demand apps and e-commerce barely touch. Amazon, having dominated online selling, has spent the last half-decade or so building out a physical retail footprint — comprised of Whole Foods stores, Amazon Go locations, and now full-blown grocery stores — to gain a foothold in those markets.
DoorDash can’t compete on the level of Amazon without having physical locations and the kind of complex and massively expensive logistics network the Seattle tech giant provides. But DoorDash can keep its edge over competing food delivery apps like Postmates and Uber Eats by offering a wider variety of items for which customers may normally use grocery delivery or a traditional Amazon order. It’s not clear what the margins are here for DoorDash; perhaps it’s buying items in bulk and reselling them or cutting special deals with wholesale providers for better rates. But DashMart clearly presents a more direct line of revenue than just being the delivery middleman for existing stores.
That more one-to-one relationship with customers seems like another reason why DoorDash is positioning DashMart as not just a way to order snacks and over-the-counter goods, but also as a kind of online boutique marketplace for rarer food items. “We’ve expanded our partnerships with national brands like The Cheesecake Factory and Nando’s, as well as with local restaurants such as Brother’s BBQ in Denver and Corey’s NYC Bagel Deli in Chicago. All of these brands have chosen DashMart to sell their fan-favorite retail products, offering them another avenue for growth,” the company explains.
Say you want a bottle of hot sauce from a barbecue restaurant you like. DoorDash says its plan is to sign those establishments up for DashMart to make it so customers can order and have delivered those items they would otherwise have had to go to a physical location to purchase. Presumably, DoorDash gets a cut of the sale, too. It’s a smart play, if enough customers end up willing to pay the associated fees to have those items delivered instead of simply buying them on Amazon or using a different avenue, like grocery delivery or curbside pickup, to obtain them on their own.