What DoorDash Builds, Uber Buys

The question is whether organic growth is best.

This week, Uber disclosed it was acquiring the remaining 47% of Latin American grocery-delivery company Cornershop—which now also serves select cities in the U.S.—after buying a majority stake in 2019. While Uber has partnerships with companies like convenience-delivery platform GoPuff, for example, it isn’t afraid to spend to grow: The company said earlier this year that it would pay $1.1 billion for alcohol-delivery platform Drizly after spending $2.65 billion last year to buy food-delivery competitor Postmates.

DoorDash’s largest-ever acquisition, by contrast, was its $410 million deal for food-delivery service Caviar in 2019, with only one small purchase since.

The company seems to have preferred to grow from within, investing heavily in the growth of its own food-delivery platform and adding its own DashMart convenience locations, for example. Where it doesn’t build, it favors partnerships: This week DoorDash announced one with supermarket operator

Albertsons

to deliver groceries from nearly 2,000 of its stores, including Safeway, Vons and Jewel-Osco.

While it is hard to know definitively at this stage which strategy will ultimately lead to superior growth, market share may offer some clues. Bloomberg Second Measure data show that U.S. share growth has stagnated for Uber Eats and Postmates both since the time their deal was announced and the time it closed, while DoorDash gained ground. Even in Los Angeles, Postmates’ strongest city, DoorDash has picked up six percentage points of market share, while Postmates lost seven in the five months ended in May, Bloomberg Second Measure data show.

Once integration with Postmates is optimized, Uber might capture more growth. Uber has forecast $200 million in run-rate synergies by the end of this year from the acquisition, for starters. BTIG analyst

Jake Fuller

says he sees Postmates’ recent share loss as less an indictment of Uber’s acquisition strategy and more a function of a timely, strategic effort by DoorDash “to inflict a bit of pain” following the acquisition.

But time is of the essence: The pandemic presented a customer-acquisition opportunity the likes of which these companies may never see again. Sensor Tower data show U.S. monthly installs of DoorDash and Uber Eats as of May roughly back to pre-pandemic levels. DoorDash owns 57% of U.S. consumer meal-delivery sales, the latest data from Bloomberg Second Measure show. And Edison Trends data from March show it has laid an even more impressive foundation in the U.S. suburbs—an eye-popping 60% market share, not including Caviar.

Both companies see the addition of new verticals such as grocery as customer-acquisition tools. Initially, though, they will likely bring new use cases and upsell opportunities to existing customers.

In the near term at least, that may give the U.S.-centric DoorDash the upper hand. As of September, DoorDash said it had over five million members in its loyalty program, available in just three countries. As of the fourth quarter, Uber, whose business is more global, said it had roughly the same number, but spanning 16 countries, including its ride-share and Eats programs as well as Postmates’ program.

Uber’s acquisition strategy might look more appealing as time goes on. Meanwhile, DoorDash is betting that, if they build it, consumers will come.

Write to Laura Forman at [email protected]

Corrections & Amplifications
In Los Angeles, Postmates lost seven percentage points of market share in the five months ended in May, Bloomberg Second Measure data show. An earlier version of this article incorrectly said Postmates lost nine points in that period. (Corrected on June 25.)