DoorDash, Uber Eats, Instacart challenge major e-commerce retailers

Third-party providers of on-demand food delivery — including DoorDash, Instacart and Uber Eats — stand to overtake some of the biggest U.S. retailers in e-commerce sales by 2025, Edge by Ascential’s Retail Insight research arm projects.

U.S. gross merchandise value (GMV) sales will more than double to $27.33 billion at Instacart and $27.58 billion at Uber Eats by 2025, surpassing Target.com, whose GMV sales are forecast to climb to $24.44 billion in 2025 from $14.87 billion in 2020, Edge Retail Insight said Friday in releasing findings from its “Sizing the Delivery Intermediary Opportunity” study. The Boston-based CPG market researcher cited Instacart’s expansion both inside and outside the grocery arena and Uber Eats’ foray from restaurant delivery into retail grocery as catalysts for expansion.

Meanwhile, Edge by Ascential and Edge Retail Insight analysts predict that DoorDash — the nation’s largest app-based restaurant delivery service — will overtake eBay.com by 2025 to become the third-biggest U.S. e-commerce banner, behind Amazon.com and Walmart.com.

DoorDash’s expansion into grocery last summer and partnerships with retailers in other categories are expected to grow GMV sales to $48.57 billion by 2025, more than doubling its 2020 sales of $22.34 billion, according to the report. And during that time span, Retail Insight analysts anticipate muted business-to-consumer (B2C) growth — excluding consumer-to-consumer sales — from Ebay.com, with GMV sales projected to rise to $34.6 billion in 2025 from $30.55 billion in 2020.  

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Edge Retail Insight’s study forecasts 2020-2025 GMV e-commerce sales to climb from $277.94 billion to $498.4 billion at Amazon (including online and offline sales) and from $29.65 billion to $61.9 billion at Walmart (including online and offline sales and Sam’s Club sales, and excluding fuel).

A method of gauging the size of a third-party (3P) marketplace, GMV is calculated by multiplying the number of products sold by the price at which each product was sold over a given time period, Edge by Ascential and Edge Retail Insight said.

“E-commerce is growing and evolving rapidly. Consumer behaviors and shopping habits have been changed forever by COVID-19, and we are living now in the future of retail,” Edge by Ascential CEO Deren Baker said in a statement. “The delivery intermediary market is an exciting, fast-moving space, defined by big mergers and acquisitions, market-moving announcements and emerging rivals with new business models that are attracting the eye of cash-rich venture capital firms.

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“One thing is for sure: Consumer packaged goods (CPG) firms can’t ignore these companies in their quest to succeed in the new world of retail,” Baker added.

The Edge Retail Insight report estimates that U.S. GMV sales at on-demand food delivery providers will grow from $63.83 billion in 2020 ($44.75 billion foodservice, $19.09 billion grocery) to $138.77 billion in 2025 ($98.86 billion foodservice, $41.91 billion grocery), for a compound annual growth rate (CAGR) of 16.8%.

That rate is nearly 1.7 times faster than the total U.S. e-commerce market, projected to grow at 10.1% CAGR over that time span, from $516.83 billion in 2020 to almost $1.1 trillion in 2025. At the same time, the share of overall online sales by delivery intermediaries — last-mile delivery platforms that partner with restaurants, supermarkets and nonfood retailers — will more than double from 5.4% in 2020 to 11.2% in 2025.

In grocery retail, the on-demand delivery market stands to grow nearly 150% to $76.27 billion in GMV sales by 2025, even after COVID-19 restrictions fade and economies reopen, Edge Retail Insight said. DoorDash is expected to account for about a third of U.S. grocery delivery platform sales by 2025, with Uber and Instacart next with about a 20% share apiece.

“As more retailers cooperate with these intermediaries as a cost-effective way to scale up fulfillment capacity quickly, we see them becoming essential points of influence in a shopper’s purchase decision,” observed Xian Wang, vice president at Edge Retail Insight. “Brands must start treating intermediaries as customers to win visibility on these platforms. On-demand delivery will be a key subchannel in retail in the future, and CPG brands will need to work out who to partner with and develop tailored product, pricing and promotional strategies to drive conversion on these platforms.”

Edge Retail Insight added that its study focused primarily on major app-based, on-demand food delivery platforms that started out delivering meals for restaurants and quickly expanded into other categories, such as grocery and health and beauty care. The analysis doesn’t include a new generation of apps that “have burst onto the grocery delivery stage in recent months, threatening to complicate supply chains even more with their promises of groceries to your door in 10 minutes,” the researcher said.

“The challenge for CPG brands is this sector is so dynamic and has such a short history, and so data to quantify the delivery opportunity is difficult to come by,” Wang added. “Our latest collection of research on this topic is designed to give manufacturers the confidence to make the right choices and investment decisions when it comes to delivery intermediaries.”