Despite concerns about a recession, inflation, and changing consumer spending habits, Uber and DoorDash continue to see significant growth as they expand into new verticals such as alcohol, convenience items, and groceries. Gross bookings for Uber’s delivery segment increased by 18% YoY to $16.1 billion in the third quarter, while DoorDash reported a 24% YoY increase with a total of 543 million orders.
Charles Lewis Sizemore, CIO of Sizemore Capital, noted, “One of the biggest fears with the delivery industry was that it was very convenient during the pandemic. But then as soon as life got back to normal, sales growth would taper off, and that great growth story would just fizzle out. And nothing could be further from the truth.”
DoorDash has been expanding its non-restaurant delivery offerings since 2016, while Uber began testing same-day deliveries for goods in 2015. DoorDash’s market share dominance in food delivery is evident, with Bloomberg Second Measure data showing that DoorDash and its subsidiary Caviar command 65% of observed U.S. meal delivery sales.
In addition to their core restaurant delivery services, both companies have recently ventured into groceries, partnering with retailers to meet the growing demand for online grocery shopping. DoorDash reported a doubling of gross order volume for its grocery business YoY, while Uber expanded its grocery selection through partnerships with The Fresh Market, Hy-Vee, and Save Mart.
These delivery companies are also building out their advertising businesses to reach more customers. Uber has expanded post-checkout ads on Uber Eats to international markets and introduced in-car tablet advertising in new markets in the U.S. DoorDash has been ramping up its retail media presence, providing advertising solutions for restaurant and brand partners.
Despite the macroeconomic challenges, the delivery industry’s shift towards convenience is driving growth in these new verticals. Food remains a necessity, and consumers are willing to spend on the convenience of delivery.
In the coming months, Uber expects gross bookings to range between $36.5 billion and $37.5 billion in the fourth quarter, while DoorDash anticipates Marketplace Gross Order Value (GOV) to reach $17 billion to $17.4 billion, reflecting an 18% to 20% YoY growth.
These delivery companies have proven their adaptability, resilience, and readiness to meet evolving consumer demands while expanding into new markets and delivering continued growth.
