Costco is adding more delivery platforms to its U.S. business, putting pressure on Instacart’s long-standing position. DoorDash said Costco will offer delivery through its platform nationwide, while a day earlier Costco expanded its Uber Eats partnership from 17 states to 47.
Instacart has worked with Costco since 2017 and entered the channel early. With DoorDash and Uber Eats now broadening their coverage at the same time, Costco’s high-frequency retail business has become a key battleground for all three platforms.
DoorDash Brings Costco Delivery Nationwide
DoorDash said it had previously worked with Costco in Puerto Rico and selected international markets. The partnership will now extend to the U.S. market. DoorDash has described Costco as one of the most-searched retailers that has not yet been available on its platform.
DoorDash and Uber both built their businesses around restaurant delivery, but in recent years they have expanded into groceries, flowers and other retail categories. Adding Costco gives both companies access to large-format household goods, food and a membership-based customer base, while increasing their overlap with Instacart.
At Uber’s earnings call in February, Chief Executive Dara Khosrowshahi said grocery and other retail sales represented “another trillion-dollar opportunity.” DoorDash Chief Executive Tony Xu has also said that its growing number of partnerships with grocery retailers could become an advantage over Amazon.
Uber Eats Extends Reach to 47 States
Uber President and Chief Operating Officer Andrew Macdonald recalled on social media that he used to shop at Costco with his father every Saturday as a child. He said he has started carrying on the habit with his daughter. For Uber, Costco is more than a new merchant: it provides access to consumers with established store-visit routines and an existing membership relationship.
Costco’s store traffic also gives delivery platforms a substantial pool of potential customers. Visits to Costco stores have increased 18% over the past seven years, while traffic at Walmart and Target has been broadly flat over the same period. Costco’s store network, membership model and relatively large average purchase sizes give its delivery business a different profile from a typical grocery order.
Instacart Retains a Membership Advantage
Instacart is not starting from scratch. Last year, the platform began offering order credits to some Costco Executive members. Executive members pay Costco a higher annual fee in exchange for additional benefits, and Instacart has positioned the offer as a way to deepen its relationship with Costco and its higher-value members.
Instacart Chief Financial Officer Emily Reuter said on the company’s August earnings call that the benefit could help strengthen the Costco partnership while serving consumers seeking additional value.
Three Delivery Models Target the Same Orders
Amazon is building its own fulfillment network and arranging for delivery workers to bring groceries to customers’ homes in as little as about 30 minutes. DoorDash, Instacart and Uber Eats, by contrast, generally rely on retailers’ existing stores for picking, with gig-economy delivery workers completing the final leg.
The broader Costco partnerships therefore involve more than individual delivery contracts. They also affect each platform’s ability to capture membership data, increase order frequency and build delivery density. Instacart still has the benefit of a relationship dating back to 2017, but DoorDash and Uber Eats are gaining broader store coverage and additional customer entry points. Pricing, membership discounts, delivery times and Costco shoppers’ platform preferences will help determine how orders are divided among the three services.