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DoorDash, Uber expand Costco delivery partnership in U.S.
Competition increases for rival Instacart
DoorDash users will be able to order same-day service from every U.S. Costco warehouse. (Angus Mordant/Bloomberg)
Key Takeaways:
- DoorDash expanded same-day delivery from all U.S. Costco warehouses starting Sept. 17, while Uber broadened Costco delivery coverage to 47 states.
- The moves intensify competition with Instacart as Costco expands e-commerce through partnerships and sees rising website and mobile app traffic.
- Costco is using broader delivery access, faster fulfillment and personalized recommendations to attract and retain members, particularly younger online shoppers.
DoorDash Inc. and Uber Technologies Inc. are expanding their delivery partnership with Costco Wholesale Corp., ratcheting up competition with Instacart as the big-box retailer expands its digital reach.
DoorDash users will be able to order same-day service from every U.S. Costco warehouse starting Sept. 17, the delivery-app company said in a statement. An active Costco membership is required and can be linked within the DoorDash app.
READ MORE: Costco nearly doubles price for Kirkland motor oil
Costco has been a major holdout for DoorDash in the U.S., where users of the app have been known to frequently type in “Costco” as a search term, according to the delivery company. DoorDash already works with the retailer in other markets, including Australia, New Zealand, Sweden, Iceland and Puerto Rico.
The highly requested addition comes a day after Uber also announced an expansion of its existing Costco delivery partnership to 47 U.S. states, up from 17. The growing availability of Costco on third-party delivery apps increases the competition for rival Instacart, which was one of Costco’s first third-party partners. Instacart continues to work with Costco in other areas, including fulfillment and building Costco’s e-commerce website.
Across the retail sector, e-commerce is accounting for an increasing chunk of consumer spending, and major chains are offering on-demand deliveries for a wider range of goods. Walmart Inc., for example, ships restaurant food, while Kroger Co. can drop off prescriptions.
At the same time, online delivery remains an area that’s notoriously expensive due to transportation and labor costs, and companies are looking for ways to make their digital businesses more profitable.
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A delivery worker carries a DoorDash bag in New York. (Yuki Iwamura/Bloomberg)
Costco, the largest warehouse club chain in the U.S., has been expanding its online footprint primarily through a string of partnerships. While it’s playing catch-up with competitors that are further ahead with their digital offerings, Costco’s e-commerce business is growing faster than core merchandising sales. Traffic to both its website and mobile app have been on the rise.
The company has generated strong sales growth in recent years, attracting price-conscious households with its popular Kirkland store brand and bulk-size selections. Like most retailers, it’s seeking to deliver orders faster and is introducing more personalized product recommendations to deepen customer loyalty. Costco has said younger people are signing up for memberships online partly due to these efforts, though they typically renew at a lower rate.
Costco ranks No. 54 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 5 on the wholesale/retail sector list.
Uber Freight ranks No. 16 on the Transport Topics Top 100 list of the largest logistics companies in North America.
