Dive Brief:

• DoorDash has struck an agreement with Aldi to provide delivery service from most of the German discount supermarket chain’s locations across 38 U.S. states, the companies said Thursday.
• Shoppers who belong to DoorDash’s DashPass membership program will receive free delivery on orders from Aldi of at least $35.
• The new arrangement reflects the expanding role grocery delivery is playing for DoorDash as it looks to broaden the selection of retailers available through its platform.

Dive Insight:

DoorDash remains closely associated with restaurant delivery, but the company has moved aggressively to grab market share in the grocery delivery space, where rival Instacart remains the dominant player.

While Instacart has worked to diversify beyond its legacy business of providing online grocery service to food retailers by positioning itself more broadly as a retail technology company, DoorDash has been stepping up its efforts to build connections with digital grocery shoppers.

DoorDash’s third-party grocery business in the U.S. doubled on a year-over-year basis in the third and fourth quarters of last year and has become more profitable, Chief Financial Officer Prabir Adarkar said during an earnings call last week. In addition, DoorDash has found that an increasing number of people are coming to the service to order goods from companies other than restaurants, Adarkar said, underscoring the importance grocery stores are playing as a way to help DoorDash expand its customer base.

Now that Aldi is aboard, over 98% of DoorDash’s monthly shoppers in the U.S. will be able to place orders through the company with an establishment that is not a restaurant, according to the announcement.

Shoppers have been asking DoorDash to add Aldi, which operates more than 2,100 stores in the U.S., to the portfolio of food retailers it works with since the delivery company started providing service to grocers in 2020, Fuad Hannon, DoorDash’s vice president of new verticals, said in a statement.

In addition to its tie-up with DoorDash, Aldi provides delivery and pickup service through Instacart, its longtime e-commerce service provider. The grocer has also been working with German e-commerce technology company Spryker to develop its own delivery and pickup platform.

Forecasters have been dialing back their expectations for how rapidly grocery e-commerce is likely to grow in the United States during the coming years after the enormous boost it received from the pandemic. According to the latest report from Brick Meets Click and Mercatus, online grocery sales are likely to increase by 2.4 percentage points during the next five years.