business news in context, analysis with attitude

Last week, MNB reported that "delivery company DoorDash has announced the launch of DashMart, which it describes as 'a new type of convenience store, offering both household essentials and local restaurant favorites to our customers’ doorsteps,' often in 30 minutes."

I commented:

If I am reading this right, DashMart also potentially puts DoorDash directly in competition with convenience stores - which is sort of ironic since, as TechCrunch notes, "the move into the virtual storefront comes a few months after DoorDash partnered with more than 1,800 convenience stores throughout the country to better respond to the needs of customers during the COVID-19 pandemic."

If this is an accurate reading of the stories and DoorDash's own blog, then I am wondering how those c-store companies may be feeling about this.  (Maybe the way that Instacart's retail clients should be feeling about that company's ability to weaponize their data and compete directly against them?)

DoorDash isn't just serving as a delivery service here.  It is creating its own online marketplace, cutting out the retail middleman in some cases, and competing against the very clients it has been servicing.  It is like the c-store version of a ghost kitchen.

One wonders if there will be a backlash.  And if there isn't, one wonders, why the hell not?

MNB reader Tom Ewing responded:

Once you have developed the store to consumer delivery service and made it as efficient as you can and still don't make money, the next logical step is to go back up the supply chain and try to be the store too.  DashMart can determine the limited number of items that meet virtually all of it's customer orders, instead of trying to pick through 15,000 to 20,000 items from a supermarket, they can deal with the less than 2,000 items that make up over 95% of consumer orders.  DashMart can then make the wholesale and retail margins to help offset the delivery costs as well as gaining the promotional opportunities with product manufacturers trying to reach consumers that DashMart touches regularly. 

Because delivery is their only business, DashMart's entire effort is focused on profiting from home delivery of the only key items from the manufacturer directly to the consumer  whereas retailers are trying to make money on their existing model and use  home delivery defensively as a service to keep the stock up shopping trip from their best customers.  Think of DashMart adding a subscription model like Costco uses on top of home delivery directly from the manufacturers and now you have a structure that could deliver a profitable venture and change food retailing.

It is an ever changing world.

I'll make the same observation about DashMart as I have made consistently - and insistently - about Instacart:  It seems like a terrific business for DoorDash.  But not so much for its c-store clients, which now may find themselves competing with the same company to which they have outsourced a considerable part of their e-commerce business.

Regarding how Amazon has adapted to pandemic-era realities, one MNB reader wrote:

Good companies not only are good at strategizing for the future but they are also good at seizing the moment, always looking to turn the big battleship if necessary.  Regardless of how one feels about them, they prepare themselves for opportunity of the moment as well as creating those opportunities in the future.  Just in time seems to be a fundamental now that they are pressing for the at home consumer, even more so because of the pandemic (Subscribe and Save).  The gift that keeps on giving!

Last week, MNB took note of an Axios story suggesting that the "wave of defaults, bankruptcies and evictions expected in cities across the US" that is likely to "remake the retail landscape across the country" is not necessarily a bad thing.

One MNB reader responded:

This all makes absolute sense.  It reminds me of when a grocery or retail chain acquires and existing chain.  They take a deep dive into the books and realize some of the they have acquired and some of their own are underperforming.  The new combined organization can close underperforming stores and also get rid of overlap where you stores too close together so support themselves.  A friend of mine in the construction industry said when they had a “resizing” or as is the newer buzzword, a “right sizing” they were able to get rid of what he called some dead wood.  People who had been with the company for years, but were no longer pursuing their jobs with the enthusiasm and results they once had, but do to their longevity with the company they were allowed to hang on.  It reminds all of us that we can never get too complacent, that we need to challenge ourselves, learn new things to remain relevant and an asset to our companies and even in our personal lives.

Regarding the proposed merger of Albertsons and Kroger, one MNB reader wrote:

I'd love to see this happen, but I don't see how, they have too much geographic overlap, and would have to divest too many stores.  I can't even see them buying Shaw's to get into the Northeast, Market Basket is killing Shaw's here. They would have to spend a fortune remodeling stores that haven't been touched in years.  

MNB reader Travis Hubbard wrote:

I like a Alibaba/Kroger deal.

And finally, on another subject, from another reader:

Covid 19 is not political, it’s a virus.  It is People who are political, as are their views.  Across the spectrum: politicians, experts, so-called experts, You and Me  think they can truly help educate, sway the dullards into enlightenment, or use the “power” of social media.  It’s just not possible now.  What Can happen, is personal thought-full-ness and personal decision.

Our family observes Sweden, who collectively has done the opposite of U.S. actions, and yet their cases, hospitalizations, and deaths as a % of population are better than the U.S.  I’m no fan of Sweden politically, but that is beside the point.  The social contract in Sweden must be strong on common sense, common good, self awareness, and personal responsibility.  Your thoughtful actions are your choice, best arrived at by thinking more, listening less, and talking little.

Points taken.  My only problem is that I sort of talk for a living.  I just try to think and listen more.  Though sometimes it is a dead heat…