By Jessica Yun and Nick Bonyhady
Food courier platform DoorDash has abandoned its foray into rapid grocery delivery just four months after launching in Sydney, Melbourne and Brisbane and claiming it would succeed where its rivals had failed.
In November, DoorDash launched three “DashMart” miniature warehouses that stocked supermarket items for delivery by its riders, with initial plans to open 29 more by the end of this year.
Rival rapid delivery companies Voly and Send had already collapsed when DashMart launched as rising interest rates exposed weaknesses in the business model, which requires expensive leases, logistics and labour to compete with the supermarket giants that dominate the $100 billion sector.
“We wouldn’t be launching and expanding if we weren’t confident,” DoorDash Australia, Canada and New Zealand general manager Rebecca Burrows told this masthead last year.
The DashMart site in Melbourne’s CBD, along with the Sydney and Brisbane site, will be shut down on May 5.Credit: Scott McNaughton
On Thursday DoorDash confirmed the stores were closing, which will cost 11 staff members their jobs.
“We are always evaluating where to invest in a way that supports the business and meets the needs of the communities we serve,” Burrows said in a statement. “As we continue to invest in grocery and convenience in Australia, we have decided to focus our efforts on prioritising selection for consumers, and supporting our merchants and partners.”
Sydney, Melbourne and Brisbane customers can continue to access DashMart for another month, with the final day of operations scheduled for Friday May 5.
DoorDash, a $US24 billion US-listed company, will instead focus on doing deliveries for partner retailers such as Coles and 7-Eleven.
San Francisco-based DoorDash senior executive Kyra Huntington informed affected DashMart staff of their redundancies on Tuesday morning before announcing it to the broader DoorDash team in a local all-hands meeting that afternoon.
Some DoorDash Australia staff who worked on the DashMart project were cut just days after it launched as part of a round of global redundancies in early December. The rest were told earlier this week that their jobs had been slashed.
A source, close to the matter but not authorised to speak publicly, said staff morale had been “ripped out” by the December redundancies, which employees were told had been made to prevent future cuts.
“It wasn’t handled well. It felt like no one knew what was going on, and the trust that had been built until that stage was eroded very quickly,” the source said.
“No one’s got answers ... It’s just bad decision after bad decision.”
DoorDash had initially planned to establish 32 DashMart sites around Australia by the end of 2023. This figure was eventually reduced to 12, then down to eight, the source said. DoorDash did not respond to detailed questions about DashMart’s operations.
DoorDash had leased two sites in Melbourne, one in Coburg and another in Camberwell, with the intention of launching DashMart warehouses.
Its decision to pull out of the rapid grocery delivery market leaves more space for serial entrepreneur Dany Milham’s Milkrun, which has had to close stores and cut staff to extend its cash reserves. Supermarket giant Woolworths’ Metro60, which uses Uber for deliveries, is also in the industry.
DoorDash's shares are down about 70 per cent from their highs during the pandemic as investors have turned away from unprofitable technology companies.
DoorDash’s closure of its DashMart operations also follows the end of Deliveroo, which pulled the plug on the Australian market last November. The food delivery platform was never profitable in Australia and incurred losses of more than $120 million in 2022.
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