- Lyft is piloting B2B on-demand delivery in certain US markets.
- Adding delivery is part of the company’s long-term growth strategy.
- Lyft said merchants are looking for delivery partners that allow them to keep relationships with customers.
- Visit the Business section of Insider for more stories.
Just when the crowded delivery space was thinning out amid consolidation, another operator is rearing its head in the highly competitive segment led by DoorDash, Grubhub, and Uber Eats.
Ride-hailing operator Lyft updated investors on its “B2B” delivery service, during its quarterly earnings call on Tuesday. The service is part of its long-term growth strategy.
“What COVID taught everyone is that the world is moving obviously even faster to e-commerce and local delivery,” John Zimmer, co-founder and president of Lyft, said on the call.
Lyft declined to disclose details, only telling investors that the pilot delivery program was going well in markets where it is testing.
“We’re quite excited about the inbound interest we’re getting, ” Zimmer said.
Zimmer called the test a “B2B opportunity” that leverages Lyft’s “existing tech and community of drivers for what we see as the best use case — same-day local delivery.”
When asked by Insider after the earnings call what type of products they are delivering, a Lyft spokesman declined to comment beyond the brief statements Lyft leaders said on the earnings call.
Zimmer said on the conference call that Lyft is getting into the space to address a demand for delivery from merchants looking to keep their digital relationships with customers. Loss of consumer data is a frequent complaint from restaurants and other businesses that work with third-party delivery providers.
“What we are hearing from these businesses is they want to focus on their organic traffic and customer loyalty and that they need a broadly scaled logistics capability that doesn’t compete with them for the direct to consumer relationship,” Zimmer said.
Lyft is entering the space when demand for delivery is surging especially in the restaurant industry. Delivery orders have more than tripled over the last two years, according to the latest market research from The NPD Group.
Cowen projects delivery sales to reach $63 billion in 2023. The surge comes as the delivery space experiences consolidation while operators like DoorDash and Uber Eats, owned by Lyft’s main rival Uber, are expanding their on-demand services.
Grubhub and Netherlands-based Just Eat Takeaway are merging later this year. Uber bought Postmates last year and recently announced plans to acquire the alcohol delivery company Drizly in a stock-and-cash deal valued at $1.1 billion.
DoorDash has been making moves to expand its delivery offerings for more than two years.
If Lyft decides to go after last-mile delivery, the company will directly compete with DoorDash.
DoorDash, the US leader in food delivery, has expanded its operations to include delivery of convenience and grocery items ordered through a company’s app or website.
DoorDash provides last-mile delivery with chains such as Walmart and Chipotle Mexican Grill.
The white-label service, known as DoorDash Drive, allows restaurants and retailers to offer delivery through their own branded channels. DoorDash fulfills the delivery. The strategy also allows merchants to keep valuable consumer data that third-party delivery operators often don’t share with merchants.
Lyft said it will likely reveal more details of its delivery partnerships later this year, including those with retailers.
“Many of these retailers didn’t have time to set up their own systems and form these types of partnerships like the ones that we’re forming with them and instead had to jump on these third-party marketplaces,” Zimmer said. “But once they’ve had the time to breathe a bit and made their investments on their tech platform, we’re quite excited about what this could mean for us and them going forward.”
Lyft reported on Tuesday that, during the fourth quarter of 2020, rides on its platform were still down 51% from the same quarter the previous year, while revenue was down 44%.
Axel Springer, Insider Inc.’s parent company, is an investor in Uber.