Costco expands ultra-fast delivery through DoorDash, Uber

Costco is expanding its same-day delivery network as it looks to grow e-commerce sales and compete with retailers like Walmart and Target.

The retailer this week launched collaborations with DoorDash (NASDAQ: DASH) and Uber (NYSE: UBER) to pick up online orders at U.S. stores and drive them to the customer’s door. The arrangements give Costco more channels to reach customers through ultra-fast delivery, made possible by gig drivers who use the platforms to select assignments.

DoorDash, best known for delivering restaurant food, announced that Costco (NASDAQ: COST) members can now order groceries, dry goods, household essentials and other products from its marketplace and then arrange fast delivery from their local store, all through the DoorDash app. The U.S. launch extends the existing relationship between the companies in Australia, New Zealand, Sweden, Iceland and Puerto Rico.

DoorDash now serves eight of the 10 largest food retailers in North America.

On Wednesday, Uber announced a major expansion of its partnership with Costco to deliver products in 47 states, up from 17 states. Nearly 600 Costco locations are now available on the Uber Eats app, where shoppers can arrange on-demand and scheduled delivery. 

Costco is also available on Uber Eats in Canada, Mexico, Japan, Taiwan, France, and Spain. 

“Costco bringing Uber Eats and DoorDash nationwide is just good business. Costco isn’t buying trucks or paying drivers to haul toilet paper across town. They’re letting delivery platforms do all the work and take on the hassle. Meanwhile, Costco keeps its main revenue stream untouched — you still have to pay for a membership to place an order,” said Dominick Miserandino, CEO of RTMNexus.com, a community for retail executives to share best practices on industry issues, in an email exchange. 

“For years, Instacart was the only real game in town for them. By bringing in Uber and DoorDash, Costco forces all three of them to fight over fees and speed. It keeps members happy, drives extra sales, and Costco doesn’t have to spend a dime running a delivery network,” he added.

Earlier this month, DoorDash began providing on-demand delivery for Skims from 17 stories across 11 states and Washington, D.C., with nine additional stores coming soon to the platform. Skims sells undergarments, loungewear and everyday clothing. DoorDash says customers, on average, can expect delivery in less than an hour. The Gap and Gap Factory joined the DoorDash marketplace.

DoorDash has continued to expand its retail delivery offering since entering the category in 2022, with tens of thousands of stores now available across a wide range of merchandise. During the summer, DoorDash linked with Shopify so independent merchants with storefronts can add their product catalog to the DoorDash marketplace and offer ultra-fast delivery. 

The expansion of food and grocery delivery platforms into retail delivery underscores the rapid evolution of the parcel delivery market, with scores of independent and regional couriers rushing to build out national networks in response to e-commerce growth and shippers’ interest in lower-cost alternatives to FedEx, UPS and the U.S. Postal Service.

Online sales now represent 16.5% of total retail sales and the segment is growing at about 10% per year, according to the U.S. Census Bureau. 

Alternative carriers now make up about 8.5% of the parcel freight market, up from handling 2.6% of parcel volume in 2021, according to The Colography Group.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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