Dive Brief:
- Dollar Tree has extended same-day delivery in as little as an hour via Instacart to 7,000 additional stores, the companies announced Thursday.
- The expansion brings Instacart's delivery service to almost 13,000 Dollar Tree and Family Dollar locations in the contiguous United States and Washington, D.C., representing the majority of the retail chain's approximately 15,500 stores.
- Dollar Tree's announcement adds a significant online presence in the discount retail space as more consumers are turning to delivery for convenience orders.
Dive Insight:
Instacart and Dollar Tree first began collaborating last November, when the companies struck a deal for Instacart to begin making same-day deliveries under a pilot involving 275 stores sporting the Family Dollar banner.
That companies' relationship grew earlier this year to cover 6,000 Family Dollar locations, paving the way for Instacart to add stores under the Dollar Tree brand to its same-day delivery portfolio, starting with a test that began in August.
The expansion comes as many more consumers are relying on same-day delivery than before the pandemic. In addition to stock-up grocery trips, shoppers are also turning to instant-needs platforms like Gopuff and DashMart that offer snacks, personal care items and household goods — items that dollar operators also specialize in.
Instacart is expanding its delivery business as it deals with mounting competition from rivals like DoorDash and Uber, which have grabbed a growing share of the grocery delivery market through partnerships with grocers.
Earlier this month, discount supermarket chain Grocery Outlet announced that after long resisting e-commerce it, too, would work with Instacart to let customers place orders for same-day delivery. Under that arrangement, which is set to last for six months, Instacart will fulfill orders from 68 Grocery Outlet stores in California.
In an example of the pressure Instacart faces in its core business line, Albertsons and DoorDash announced in June that the grocery chain would offer 40,000 grocery items from stores for same-day delivery via DoorDash's white label fulfillment platform, DoorDash Drive. Albertsons is also working with Uber to use the tech company's Uber Eats platform to serve delivery customers of several banners, including Safeway, Acme and Randalls.
Dollar Tree archrival Dollar General is also a DoorDash partner.
Beyond competition from other e-commerce companies, Instacart has been dealing with waning customer loyalty, Barclays bank recently reported. Meanwhile, pickup services — which are key area of investment for grocers — have emerged as shoppers' favorite online fulfillment method, according to a survey by Mercatus. While Instacart also handles pickup operations for some grocers, the company remains heavily reliant on its delivery business.
Instacart has recently taken steps to build its 30-minute grocery delivery service, announced in May. In September, Kroger said it would work with the e-commerce company to launch "Kroger Delivery Now," which offers delivery of 25,000 items in a half-hour or less. Ahold Delhaize banners The Giant Company and Stop & Shop have also said they're working with Instacart on 30-minute delivery.
