You’d hardly recognize the delivery app landscape today compared to just two years ago. What began as a lifeline during pandemic lockdowns has morphed into something far more ambitious, with major platforms now racing to transform themselves into retail marketplaces that happen to deliver food too.
Last week, Uber announced a significant expansion of its partnership with Loblaws, bringing more than 2,000 PC Express products to its Canadian platform. This follows similar moves by competitors DoorDash and Instacart, both of which have aggressively courted non-restaurant retailers.
“We’re witnessing the second act of these delivery platforms,” explains Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. “The economics of restaurant delivery alone were never sustainable long-term. Retail partnerships offer better margins and steadier demand curves.”
The numbers support this strategic pivot. According to market research firm NPD Group, non-restaurant orders now account for approximately 27% of all delivery app transactions in Canada, up from just 8% in early 2021. Retail delivery represents the fastest-growing segment across all major platforms.
For Uber, which saw its food delivery revenue plateau last quarter at $2.9 billion globally, diversification comes at a crucial moment. The company’s earnings report revealed retail partnerships now contribute approximately 15% of delivery revenues, with significantly better profit margins than restaurant deliveries.
“Restaurant delivery operates on wafer-thin margins,” notes Lisa Hutcheson, managing partner at retail consultancy J.C. Williams Group. “The average order value in retail can be three to four times higher, with less time sensitivity and more predictable demand patterns.”
What makes retail partnerships particularly attractive is the improved economics for all parties involved. Unlike restaurants, which often struggle with commission rates between 15-30%, retailers can negotiate more favorable terms by leveraging their scale and offering exclusive product access.
Behind this strategy lies a fundamental rethinking of what delivery apps actually are. Rather than mere logistics services, they’re repositioning as discovery platforms – digital front doors to everything from pharmacies to electronics stores.
The transition hasn’t been without challenges. A former Instacart operations manager, speaking on condition of anonymity, described the cultural shift required: “We had to completely retrain our systems. Restaurant delivery is about speed at all costs. Retail requires inventory accuracy and careful handling. The learning curve was steep.”
For Canadian retailers, particularly mid-sized operations without technology resources to build their own delivery infrastructure, these partnerships offer a competitive lifeline against Amazon’s growing dominance.
“It’s essentially an outsourced e-commerce department,” explains Jordan LeBel, professor of food marketing at Concordia University. “Small retailers get immediate mobile presence, logistics capabilities, and access to a young demographic that might never visit their physical locations.”
The integration goes beyond simply listing products. Innovative features like Instacart’s “ready meals” section blur the line between restaurant takeout and grocery prepared foods. Meanwhile, DoorDash‘s recently launched “DoubleDash” feature allows customers to add items from nearby retail stores to their restaurant orders without additional delivery fees.
Not everyone is convinced the strategy will succeed. Retail analyst Bruce Winder cautions that fundamental unit economics remain challenging: “Eventually, someone has to pay for that last-mile delivery cost. Whether it’s the consumer through fees, the retailer through commissions, or investors subsidizing losses – the math still needs to work.”
Indeed, profitability remains elusive. While Uber recently reported its first full year of adjusted profitability, its delivery segment still operates with slim margins. DoorDash has yet to consistently generate net income despite commanding approximately 65% of the Canadian food delivery market.
The battle for retail partnerships has sparked new competitive dynamics. Walmart Canada recently ended its exclusive relationship with Instacart, adding both Uber Eats and DoorDash as delivery partners. Smaller specialty retailers find themselves courted with increasingly favorable terms as platforms seek unique inventory.
For consumers, the retail expansion brings both benefits and potential drawbacks. More selection and faster delivery times come alongside concerns about data privacy and the potential consolidation of retail power in the hands of a few delivery platforms.
Looking ahead, industry observers expect continued convergence between food delivery and retail. Several sources suggest Uber is developing technology to enable multi-location orders in a single delivery – allowing customers to combine restaurant meals with drugstore items or grocery essentials.
“We’re really just seeing the beginning stages,” says Charlebois. “The logical endpoint is unified commerce, where the distinction between restaurant, grocery, and retail becomes largely irrelevant from the consumer perspective.”
As these platforms continue evolving, one thing remains clear: what started as a simple way to get dinner delivered has grown into something far more ambitious – a reimagining of how urban Canadians access goods of all kinds. Whether this vision succeeds commercially remains one of the most consequential questions in both the technology and retail sectors.
