Loblaw partners with DoorDash on 30-minute grocery delivery

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Canada’s largest retailer is getting into the increasingly competitive rapid grocery-delivery field through a partnership with San Francisco-based DoorDash Inc DASH-N.

Starting in August, Loblaw Cos. Ltd. L-T will offer customers delivery in roughly 30 minutes or less, beginning in Toronto and Winnipeg before expanding to 10 locations across the country within that month. Within a few years, Loblaw expects to have 40 to 50 PC Express Rapid Delivery locations.

While the 30-minute delivery window is not guaranteed for all orders, Loblaw’s collaboration with DoorDash demonstrates how customers’ expectations around grocery e-commerce are evolving. Services have been sprouting up in some Canadian cities promising grocery delivery in as little as 10 to 15 minutes. But while services such as Gorillas, Getir and Gopuff are already popular in other markets including New York and major European centres, those companies have yet to launch in Canada, and it is still early days for the industry here.

“There is a market for quick commerce,” Lauren Steinberg, senior vice-president of Loblaw Digital, said in an interview. “Nobody knows how big it will actually be. But we can’t identify the size until we’re playing in it, and we do believe that if we wait, we will be too late. … There will be a shift in consumer purchasing behaviour over time.”

Among rapid-delivery startups in Canada, consolidation is already beginning: Last week, grocery e-commerce company Inabuggy Inc. struck a deal to buy Ninja Delivery, which offered to ferry orders to customers’ doors on e-bikes in just 10 minutes.

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Most of Canada’s major grocers have invested in e-commerce capabilities – including Loblaw’s PC Express – offering online orders both for store pick-up and home delivery. But in many cases, the retailers’ offerings require customers to book a time slot hours in advance. Some have partnered with services such as Cornershop and Instacart for same-day delivery. Loblaw already works with Instacart and will also begin offering same-day delivery through DoorDash; the faster Rapid Delivery service will be accessible both through the PC Express app and online, and through the DoorDash app.

“People’s expectations get higher over time,” DoorDash co-founder Andy Fang said in an interview during a visit to Toronto on Tuesday. “What customers thought was the norm a couple years ago, if we did that today, they’d think we’re too slow, not enough selection, not affordable enough.”

Such rapid-delivery services typically keep their fees very low – undercutting the fees charged by big grocers for same-day or next-day delivery services. (Loblaw’s existing PC Express service charges $9.99 for delivery, or $3 to $5 for store pick-up.) Delivery fees through DoorDash vary by location, and depending on whether a customer has a DashPass membership.

But Ms. Steinberg said she does not believe the service will cannibalize other online offerings: The selection is more limited, and rapid delivery is targeted to customers who would otherwise be running to the corner store for a few forgotten items or ordering a full meal for takeout, for example. The existing PC Express lists products at the same price as in stores, she said, and the company is still working on the prices for products offered through the rapid service.

DoorDash, which built its business on restaurant deliveries, has already been expanding into the grocery quick-delivery space, by investing in building mini-warehouses called DashMarts in cities including Toronto, London, Kitchener, Vancouver and Winnipeg. These “dark stores” facilitate fast orders by stocking popular grocery and convenience items in small, central locations – often, storefronts that are not open to the public – and delivering to customers nearby.

It is not alone: Winnipeg-based SkipTheDishes, owned by Britain’s Just Eat PLC, has also been building dark stores in Canada called Skip Express Lane, to deliver convenience items and grocery staples in less than 25 minutes.

Mr. Fang would not disclose how many dark stores the company currently has in Canada, though they have been expanding, both here and in other markets. In New York, DoorDash is experimenting with 10- to 15-minute delivery times for DashMart orders, he said.

The partnership with Loblaw will give DoorDash access to the grocer’s supply chain to stock its dark stores. The company will continue to operate its own DashMart delivery offer, but certain products such as President’s Choice and other house brands will only be available through the PC Express Rapid Delivery service.

Loblaw has been working on developing its e-commerce operations, for example by setting up micro-fulfilment centres within larger stores. It is also building its own dark stores to serve same-day and next-day PC Express customers in areas where demand is especially high; the first such location is opening in Toronto in the coming months, with more planned in the future.

“Delivery, as a total share of our business, is growing,” Ms. Steinberg said.

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