Dive Brief:
- Kroger plans to use DashMart Fulfillment Services, a new online delivery service from DoorDash that relies on delivery-focused stores it operates across the country, according to a Tuesday announcement.
- The grocer, which plans to offer groceries and household items through the service, will join other retailers like CVS and Party City, which are currently using the service.
- The announcement comes on the heels of Kroger expanding DoorDash delivery to all 2,700 of its stores and highlights the grocer’s reliance on third-party delivery companies to help power its e-commerce business.
Dive Insight:
The DashMart tie-up is notable because it’s another instance of Kroger relying on separate facilities for online order fulfillment. The grocer utilizes a network of automated fulfillment centers to power its proprietary delivery service, but executives have recently said they believe Kroger’s stores are better suited for picking and packing e-commerce orders.
Kroger could rely on DashMart facilities to offer delivery in city centers and other areas where the grocer’s stores don’t reach. Through DashMart Fulfillment Services, DoorDash workers handle incoming orders, pick products and hand deliveries off to DoorDash drivers to take to customers.
The DoorDash announcement said the fulfillment service with Kroger is “coming soon.” It’s unclear when and where Kroger will start utilizing DashMart facilities and what sorts of items the grocer will rely on the delivery company to fulfill. A DoorDash spokesperson declined to share additional details, noting the partnership is still in the early stages.
DoorDash launched DashMart five years ago as a digital convenience store available through the company’s app. Now, with more than 100 locations across the country, DashMart is offering fulfillment as a service for retailers that want to offer quick, managed delivery to customers. Retailers can offer goods on their own site or through DoorDash’s platform, the announcement noted.
“This turnkey model empowers retailers to grow their digital presence and reach more customers without the cost of new infrastructure, inventory management, or technology investments,” according to DoorDash’s announcement.
Kroger’s announcement earlier this week that it will offer store-based nationwide delivery through DoorDash builds on a partnership that began nearly three years ago with sushi and floral delivery. Kroger also has a longstanding relationship with Instacart, which includes a 30-minute delivery service launched in 2021, and offers delivery through Uber as well.
Kroger’s e-commerce sales grew 16% during the most recent financial quarter — a sign that the grocer’s digital strategy is resonating. However, the business is still not profitable, and Kroger is taking steps like evaluating its automated fulfillment network and creating a separate e-commerce business unit to improve results.
