In its first results announcement since its IPO last year, DoorDash has reported stellar Gross Order Value (GOV) growth illustrating the increasing importance of intermediaries and last-mile fulfillment providers in the digital landscape. With the operator expecting a more cautious outlook for 2021, DoorDash is looking to new services, categories, and channels to maintain growth.
For the Q4 period, Marketplace GOV surged 227% YoY to $8.2 billion. For the 12 months to 31 December 2020, Marketplace GOV came in at $24.7 billion, compared to $8.0 billion in 2019.
These big numbers have no doubt been buoyed by the Covid-19 pandemic with lockdowns and restaurant closures seeing Americans turning to food delivery services in their droves. Edge data shows that the combined value of delivery intermediaries/food aggregators grew by 121% in North America alone during 2020. Yet, DoorDash still saw a deepening Q4 net loss of $312 million, almost double the $129 million loss it made in the same period in 2019.
DoorDash’s GOV growth also highlights the emergence of truly global and regional players within the intermediary landscape. According to Edge data, DoorDash is battling with Uber Eats to be the third-largest Delivery Intermediary globally and is already the single largest in North America, but there is no room for complacency in this increasingly competitive market.
Uber bought US startup Postmates last year for $2.7 billion and recently acquired Boston-based alcohol ecommerce marketplace Drizly for $1.1 billion. European food delivery app Just Eat Takeaway agreed to buy Grubhub last summer in a deal worth $7.3 billion. So, it’s safe to say the food delivery war is just getting going, and just at the moment when the Covid-19 vaccination programme promises a return to some sort of ‘normality’.
The DoorDash founder and chief executive Tony Xu has admitted in interviews that the business will find it difficult to maintain the growth momentum of 2020 in the future. DoorDash is forecasting “declines in consumer engagement and average order values” in 2021, although it still expects Marketplace GOV to reach between $30 billion and33 billion.
The changing landscape is one of the key drivers behind DoorDash looking to diversify into services and partnerships, including delivery from grocery stores, pet products and prescriptions. It also recently bought Chowbotics, a California-based automated food preparation company, which will allow DoorDash merchants to expand their menu offerings to reach new customers or markets quickly and at a lower cost.
DoorDash said the number of consumers who ordered from a convenience or grocery store increased by 95% in the month of December 2020 compared to September 2020. DoorDash also reported strong growth of its Drive service, which enables merchant partners to operate their own digital presence while benefiting from DoorDash’s fulfilment - a service it is looking to expand with more retail partners in the future.
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