Delivery Hero Hits Profitability
Target & Starbucks Drive Up team up, eGrocery sales up, USPS quarterly results
Looks like the naysayers were wrong; delivery can be profitable! Delivery Hero just dropped off some impressive results for the first half of the year, with the multinational eking out a profit, fresh off the heels of Uber running in the black as well. We’ve got some other strong financial results and interesting new product launches in this edition as well. Read on!
Delivery Hero’s Heroic First Half
Target & Starbucks Innovate New Drive Up Delivery
Chart Time | eGrocery Sales Rise MoM
USPS’ So-So Quarterly Results
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3PD | Delivery Hero Records First Profitable Quarter
Germany’s 3PD giant delivered some delicious news this morning: it swung to a profit for the first time in Q2 / H1 2023. Gross merchandise value hit 11,083.8 Euros for the most recent quarter, up from €10,776.0 a year prior, representing an acceleration that was ahead of earlier internal projections. Segment revenue reached €2,581.4 for the quarter. The company EBITDA for the half was €9.3M — not a huge payday in and of itself, but an impressive milestone for an industry that’s oft struggled to break even.
The Big Picture: Delivery Hero projects its results will only improve from here on out, with adjusted EBITDA expected to climb to 1% of GMV in the second half of the year (it was 0.2% in Q2.) YoY, GMV growth was up in the Americas, Europe, and the Middle East (where a 21% improvement shows the logic behind Hero’s recent HungerStation acquisition.) Asia — the company’s largest market — was a bit wobblier: up 2% in constant currency, but down 5% in reported currency (dang exchange rates!) The company is also optimistic about Dmarts, its quick commerce branch, which recorded its first profit in June, and saw 38% GMV growth YoY, despite operating fewer locations.
RETAIL | Target & Starbucks Take Drive Up Delivery Nationwide
Target is adding a new fulfillment option for caffeine-craving consumers: drive-up Starbucks delivery. This builds off an initial pilot that launched late last year in New Jersey, which was evidently strongly received: "Our guests have long told us Drive Up is a game-changer, adding convenience to their daily life, especially when they're short on time," said Mark Schindele, Chief Stores Officer. It works like this:
After a guest places a Drive Up order at a participating Target store and receives notification that it's ready to pick up, they will indicate they are on the way in the Target app.
The guest will then receive a prompt in the app to place a beverage or food order from the Starbucks menu. They make their Starbucks selection, click "Add for Drive Up" and pay for the order.
The guest parks in the Drive Up parking area and taps "I'm here" in the Target app. A Target team member then delivers the freshly prepared Starbucks order — along with the guest's Drive Up purchase — to their car for free.
The Big Picture: Target and Starbucks have worked together for a good 20 years, initially as a store within a store option to keep shoppers amped up (you need to wash that Pizza Hut Express down with something, after all…) But this new option shows how serious Target is about differentiating itself with delivery and time-sensitive options: the company’s long tinkered with its Shipt subsidiary, and recently announced that customers can use Drive Up to make free returns.
GROCERY | Delivery & Ship-to-Home Return to Growth
Grocery delivery sales grew in July, as 1PD, 3PD and ship to home all saw performance strengthen, more than offsetting losses among pickup customers. Overall digital sales hit $7.2 billion, which while representing a monthly gain, are down from $7.8 billion a year prior. More customers are opting for digital groceries, but the frequency per customer has declined. For context, this entire category did about about $2 billion in monthly sales pre-pandemic, and hit $9.3 billion at its peak in early ‘21.
LOGISTICS | USPS Quarterly Revenue Cools
While we’ve been busy tracking the narrowly-averted UPS strike, we almost forgot about the humble postal worker. The government’s logistics giant reported its quarterly results (which it oddly calls Q3, grumble grumble something about that dang bureaucracy….) Overall revenue declined mildly from $18.741B to $18.573B, while volume saw a steeper drop off: 30.470B to 27.005B pieces.
The Big Picture: First class mail (think envelopes) saw a slight improvement for the quarter, and shipping / packages were essentially flat; perhaps looming strike concerns at UPS pushed some customers to move important parcels over from Brown to the Red, White and Blue. The real drop in sales came from a decline in Marketing Mail, which saw 14% less volume YoY; somehow we think the average recipient isn’t going to be too sad about getting slightly less spam (we mean… promotional flyers) in his or her mailbox.
A Few Good Links
TikTok replaces shopping head with Amazon and Meta veterans. MicroSale and iPOS partner on restaurant payments. Lyft increased rev, trimmed losses in Q2. Taco Bell aims for 10k units, emphasizes “Go Mobile” digital-forward model. Coffee drive-thru Dutch Bros names new CEO as it aims for 4,000 units in 15 years. T-Bell and DoorDash to give away $5M of tacos (from any brand) on Sept. 19 as cheeky celebration of Taco Tuesday lawsuit against Taco John’s ending. UK’s right-wing immigration crackdown hits delivery workers. DoorDash and fast food giants team up for Battle of the Brands at PAX West.
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