Basket Control Over Delivery Speed
Former head of strategy at a global on-demand giant on the economics of grocery delivery
The key gap was not delivery speed, it was basket control. Early grocery on Uber and Deliveroo mostly plugged grocery stores into an existing courier network, which helped them add supply fast but gave them weak control over what customers bought, how often they came back, and how to steer them toward higher margin items. Dark store operators were trying to solve those problems from day one, but without the mature recommendation, pricing, ads, and retention systems larger platforms built only later.
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The first marketplace model was basically a patch. Uber, Deliveroo, and peers partnered with chains like Tesco and Waitrose, used stores as local handoff points, and sent existing couriers to do the last mile. That worked for convenience, but not for habit formation or predictable AOV.
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Dark stores changed the job. Once a company stocked its own 3,000 square foot site with a few thousand SKUs, it could decide assortment, availability, substitutions, promotions, and delivery promise. That creates the raw material for margin improvement, because the operator can push non perishables, reduce spoilage, and bundle more items per order.
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The later evolution at scaled platforms shows what these missing capabilities look like in practice. Uber built Sponsored Items and grew advertising to a $900M revenue run rate by Q4 2023. Deliveroo launched Deliveroo Media in 2022 and reached ad revenue equal to 1.4% of GTV in Q4 2024. Instacart generated $871M of advertising and other revenue in 2023, equal to 2.9% of GTV. Those products matter because they turn item level demand shaping into a profit center.
The next phase of grocery delivery is less about who can arrive in 10 minutes, and more about who can turn a low margin errand into a repeat, higher basket shopping habit. The winners will be the operators that combine owned inventory, dense local fulfillment, and mature merchandising and ads systems, so every order becomes more predictable and more profitable over time.