(Staff and Bloomberg)—DoorDash Inc. wants to be more than a meal-delivery service. The restaurant courier signed on to make fresh-food deliveries through a partnership with Walmart Inc., which is looking for ways to keep up with a heavy investment by Amazon.com Inc. in grocery delivery.
Walmart Inc. (No. 3 in the Internet Retailer 2017 Top 500), says it also is working with on-demand delivery company Postmates Inc. Postmates began delivering groceries to Walmart customers in Charlotte, N.C., on April 10.
Walmart’s deal with Postmates follows an announcement in March in which the retail giant said it would expand its own grocery delivery services to more than 100 metro areas during 2018, up from the current six markets. Walmart’s goal is to offer grocery delivery to more than 40% of U.S. households by the end of the year.
While grocers have not been ignoring delivery, retailers have so far focused much of their e-commerce expansion around facilitating customer pickup of online orders. Walmart, for example, now has 1,200 grocery-pickup points—up from 800 several months ago—and plans to add 1,000 more by the end of 2018.
The world’s biggest retailer started using DoorDash software to offer grocery items to some customers who place orders through Walmart’s website and apps. The new service, which is only available in Atlanta to start, charges customers a $9.95 delivery fee on each order of at least $30 worth of goods. Customers can receive their purchases on the same day they order.
The market for grocery delivery has mainly been a race between Amazon (No. 1) and Instacart Inc., a heavily funded startup that has a delivery arrangement with Walmart-owned Sam’s Club. Last month, San Francisco-based DoorDash got a cash infusion of $535 million led by SoftBank Group Corp. The investment, which valued DoorDash at $1.4 billion, is being put to use on high-profile partnerships like the one with Walmart and a hiring spree, said Tony Xu, the startup’s co-founder and CEO. This year, DoorDash expects to double engineering staff to 300 and sign additional retailers in the U.S. and Canada, he said.
Christopher Payne, DoorDash’s chief operating officer, runs a unit developing software that retailers can integrate into their own sites and apps. Walmart is an important test case. “Meal delivery is really a small sliver of what we’re working on,” Payne said.
Following Amazon’s $13.7 billion purchase of Whole Foods last year, Walmart has been ramping up its grocery-delivery strategy. In March, the company said it would deliver fresh fruits, produce and pantry staples from 800 stores before the end of the year. It also works with Uber Technologies Inc. and Postmates Inc. to deliver goods.
James Melton contributed to this article.