DoorDash adds Sephora in push to diversify fast delivery offerings

DoorDash adds Sephora in push to diversify fast delivery offerings

This article was first reported on and published by Glossy sibling Modern Retail.

DoorDash is adding Sephora to its marketplace offerings, marking the delivery service’s first foray into high-end beauty amid a general expansion into new product categories.

The partnership, announced Wednesday, means DoorDash customers can shop from Sephora directly through the app and receive products from a nearby store within an hour. DoorDash is also launching a new “Beauty” category to highlight the incorporation.

It’s part of an overall push by DoorDash to grow beyond its restaurant-focused beginnings. In late October, DoorDash added Tractor Supply to its app, its entry into the farm category. And in September, it added Dick’s Sporting Goods as its first sports partner.

“We’re seeing this trend of convenience being pulled through all the different verticals, and we’re seeing demand for the beauty category,” said Shanna Prevé, DoorDash’s director of partnerships.

The expansion comes as rival Instacart, which built its brand on grocery delivery, is also expanding into non-food categories such as furniture and appliances. And overall, consumers are showing increased interest in fast delivery: Research firm Technavio found in October that same-day delivery market share is expected to grow at a CAGR of 21.4% through 2026, boosted by the ubiquity and convenience of smartphones.

Prevé said she expects Sephora orders to come from people who want to quickly restock after they run out of an item, those who are traveling, or people who want to send a unique gift.

“It was always part of the plan,” she said of the expansion. “We want to make every purchasable item in your community available on your doorstep in minutes. Not hours, not two days from now.”

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New categories

The company began diversifying its offerings beyond restaurants about four years ago, Prevé said. That included a move into grocery in August 2020, plus specialty retail like Office Depot in March and Bed, Bath and Beyond last fall.

As of December 2021, approximately 14% of DoorDash’s 25 million customers shopped the newly added non-restaurant categories.

“New verticals are growing faster than even our core business,” she said. “So we’re investing a lot there, and we’re seeing good results with our consumers.”

Amit Kalley, CEO at e-commerce platform Infosys Equinox, said consumers expect fast and efficient delivery, especially since the pandemic. The online shopping boom meant that many customers were comfortable with getting items delivered the next day, or at least within two days.

“There has been a fundamental shift in consumer behavior towards digital,” he said. “What it ends up meaning is that consumers not only expect but demand that they get the same experience, the same convenience, the same level of service, that they’re used to when they’re in the store.”

For DoorDash, that means an opportunity to bring in new customers. On its third-quarter earnings call last week, CFO Prabir Adarkar said DoorDash is expanding into new categories because they give the business scale. In particular, they are attracting new customers who are not currently using DoorDash for restaurants.

“They can now use it to get their flowers or get their amenities or get their groceries or get liquor delivered,” he said. “And so an increasing number of our new customers are now actually coming to DoorDash to try these new categories, and this is going to unlock the next stage of growth as we continue to increase our penetration of the US population.”

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DoorDash is also pushing DashPass, its $9.99 per month membership plan that waives delivery fees and provides special offers like coupons and credits.

Jan Soerenson, North American general manager of e-commerce services platform Nest, told Modern Retail that apps like DoorDash can diversify more now ahead of a potential recession. This will help them match supply to demand, especially if consumers are shying away from expensive restaurant reservations.

“Given a possible looming recession, I think many delivery apps today want to avoid the situation Uber faced post-Covid when it had to increase its driver count quickly and was unable to do so when demand returned,” Soerenson said. “Better to keep the supply side busy.”

The draw of Sephora

DoorDash soft launched Sephora shipments in mid-October. Prevé did not share order numbers, but said early demand appears strong. Top sellers include cult favorites such as The Ordinary’s glycolic acid, Beauty Blenders, Olaplex hair products and Charlotte Tilbury’s Pillow Talk lipstick.

For Sephora, the move to DoorDash could mean more customer acquisition. On the DoorDash marketplace, customers searching for any of the 340 beauty brands offered by Sephora can end by placing an order.

“I think one of the reasons a lot of retail partners are excited to launch on DoorDash is that they have access to a fundamentally different set of consumers,” Prevé said.

A Sephora spokesperson declined to say how many same-day orders it currently receives, or what proportion of its customers use same-day delivery services. But the retailer has added an increasing number of options. In September 2020, it partnered with Instacart, and in November 2021, it launched its own same-day delivery service. It was added to the Shipt marketplace in March 2022, and this fall announced a $49 annual subscription for unlimited same-day shipping.

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Nadine Graham, svp and general manager of e-commerce for Sephora, said in a press release that the partnership with DoorDash is “a natural next step in the continued evolution of ease of use and convenience” for consumers.

Kalley of Infosys Equinox said that for retailers, partnering with apps like DoorDash can help solve problems around last-mile delivery, which can be expensive or cumbersome for larger retailers to map across the country. And whether it’s with an app, internal logistics plans or a mix, he expects more retailers to find ways to figure out same-day shipping from store locations as a way to manage logistics cost pressures.

“Every dealer is in a certain space to adopt it,” he said.

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