DoorDash weighs speed versus profits in rapid delivery pilot

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[NEW YORK] It may not be possible to offer a 15-minute delivery service and be profitable, DoorDash chief operating officer Christopher Payne said at an industry conference on Tuesday (Mar 29).

But that's not keeping a lot of companies from trying. DoorDash rivals like Instacart and Uber Technologies as well as a crop of startups led by Gorillas Technologies GmbH, Getir and Jokr, are vying to ferry items to customers in record time. For many, it's still a money-losing venture.

"All of us are beginning to test the balance: does 15 minutes matter? Is 30 minutes good enough? Can you make the economics work at both service levels?" Payne said, speaking at the ShopTalk conference in Las Vegas. "I don't know where the edge is yet. It's probably not 15-minutes, it's probably 30-minute delivery that you can make the math work. I think customers will still be delighted by that."

DoorDash is the largest food-delivery company in the US, with 58 per cent of the market, according to Bloomberg Second Measure. The San Francisco-based company has parlayed its success in delivering restaurant meals to other services like grocery, convenience items and retail.

Shares in DoorDash and other marketplace companies like Uber have come under pressure amid growing investor skepticism. DoorDash stock has declined 17 per cent this year to US$123.55 at Tuesday's close in New York.

While growth in the delivery sector has decelerated from the triple-digit pace spurred by Covid-19 lockdowns, appetite for on-demand commerce is still "far higher" than pre-pandemic levels, Payne said. "Consumer expectations are only going in one direction."

In December, DoorDash launched a 15-minute delivery pilot service in New York. Payne said increasing scale will ultimately lead to better efficiency in ultrafast delivery.

Customers "want it all and they want it now", Payne said in an interview with Bloomberg Technology's Emily Chang. "We'll continue to push the edge of that. Some of that will lead to a pullback. It may not work and some it will work wonderfully." BLOOMBERG

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