DoorDash – Grocery On-demand Expansion News & Recent Developments
DoorDash – Grocery On-demand Expansion News & Recent Developments
Last Updated on September 2, 2021
DoorDash is a well- known name today, in the e-commerce era when commerce has tipped over in the favor of consumers in a big way, especially because it’s a tough competition since several new startups pop up in the market every day. It is not easy to accomplish what DoorDash has accomplished, and that too with so many hurdles along the way. Despite all the rough blows at times, DoorDash has come out stronger on the other side, and is probably one of the most influential startups in recent times, in its category.
Recently, DoorDash announced something likely to change the company’s direction yet again. But before we discuss DoorDash’s recent move, let’s catch up with the company’s past, and what it is providing to its consumer base. Let’s begin!
What is DoorDash?
What started as a Stanford Business School class project, slowly became one of the most popular food delivery services in America. Its creators were Stanford students Tony Xu, Evan Moore, Stanely Tang, and Andy Fang. The initial thought of these students was to locate a problem and produce an effective solution to that problem.
Some fact about DoorDash
|Founders||Founded on||Headquarter||Total Funding raised ($)||Valuation|
|Tony Xu||July 2013||303 2nd St Sans Francisco||$900 million||$16B|
They found out that many of the local restaurants in their location did not deliver. Assuming a demand, as an experiment, they made PaloAltoDelivery.com, the initial face of what is today, DoorDash.
It was a simple step, and with a simple eight-page PDF of menus, they were the ones picking up calls and delivering.
The success of this initial experiment prompted them to expand their operation, and slowly, DoorDash started to emerge out of the shadows. Investors interested in the project, money started coming in, and the DoorDash team started to grow little by little.
But the road has not been easy for DoorDash either. The company has had a lot of issues to date such as drivers acting out because they were dissatisfied with the payments. The company’s pricing and employment practices have also been often criticized. However, the company has aggressively moved towards growth.
- DoorDash has announced the launch of its online convenience store Dashmart. Along with its other offerings, DoorDash is now also going to offer its users a selection of essentials such as grocery, convenience, and restaurant items. Although the store is curated and owned by DoorDash, it mostly features products sourced from its local partners. The store is live already in eight cities and plans to expand in the coming months.
- Recently, DoorDash has also announced its entry as an online Grocery delivery service. DoorDash has partnered with grocery stores throughout the country and is ready to take on the giants in the category such as InstaCart, Amazonfresh, and other major grocery delivery apps. The Grocery Delivery will begin with Meijer Inc (among others), and with time, include more regional brands into its network. Those who have the company’s membership the “Dash Pass” will get the services with their pass, and other non- subscribers will have to pay a $3.99 delivery fee with their orders. Grocery stores will be charged a small percentage to cover the delivery costs.
- DoorDash has announced its multi-year marketing partnership making it the official On-Demand Delivery platform of NBA, WNBA, and NBA 2K League. The partnership coincides with the start of the 2020 NBA Playoffs and will be donating $1, up to $100,000, to the National Urban League for every order placed from a Black-owned restaurant on the DoorDash platform through the end of August, in its efforts to support black communities. The company will also offer $0 delivery fees from its merchant partners in the same spirit, throughout the end of 2020.
These are the most recent developments in DoorDash’s journey. The company seems to be manoeuvring in a new direction, and it’s going to be interesting to see what the future brings.
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Let’s take a quick look at the business and revenue model of food delivery business to understand its workings.
- DoorDash’s Business Model: A Quick Peek
DoorDash Provides service to the busy masses of today, who for one reason or another, cannot, or don’t want to leave the comfort of their own space to get food. Company’s customer may be a tired employee working overtime at the office, or a gamer who doesn’t feel like leaving his or her game station just yet; a couple that’s halfway through their Netflix movie and angry for some Chinese, or somebody who just want to call it a day and just pamper him or herself with a treat from their favorite restaurant.
To put it shortly, the consumer base for the company is widespread, and the business model of the company involves three segments that interact, thanks to DoorDash. Let’s have a look.
- The Eaters (consumer base)
These are the people who want the food delivered to them, from the places of their choosing. They create the demand and are the most crucial part of this model. These are busy people, don’t know how to cook, don’t have a space to cook, or just don’t feel like cooking. Whatever the reason behind their need may be, it is they who are going to put up an order, using the app or the website, and DoorDash fulfills their need with the help of the other components of this model.
- The Restaurants
DoorDash does not prepare the orders, rather, it gives the users a selection of restaurants to choose from, and these Restaurants, in turn, get the delivery network of DoorDash for their business. Businesses that are too small to have their delivery service, or are willing to be part of the food- delivery phenomenon to boost their consumer base, are a part of this group.
- The Dashers ( Delivery Network)
DoorDash employs people who can then pick up orders from restaurants, and deliver these orders to the users at their homes, offices, or wherever they’re ordering. It is a flexible job that comes with good tips, and other incentives. Most people can get the job if they’re interested and have the required skills, which for the most part, is adequate driving skills.
For each segment, DoorDash has plenty of incentives to participate. It is an effective model, which connects the right segments to provide a solution to a manageable, yet overlooked need. The process is simple as well. Users place an order on the app or the website, they make a payment, which goes first to DoorDash, and then is forwarded to the Restaurant owners. Now the order is prepared by the restaurant and picked up by the delivery personnel. Users can track their orders in realtime with the app. Once their order arrives, they have the option to tip the delivery person, who gets to keep the tip.
Here’s in detail- Business Model Of DoorDash
This is how the DoorDash Model works. But, how does DoorDash earn money? let’s find out!
DoorDash Generates its revenue in a variety of ways.
- Delivery Fees
On each order that is placed by the users, DoorDash charges users a delivery fee. This fee can be anywhere from $5 to $8 per order.
- Commission from Restaurants
Since it provides restaurants with its own delivery network, boosting their sales and overall profit, DoorDash charges a small commission from the restaurants that are a part of the operation. Usually, the commission from the restaurants is about 20%.
Along with the commissions and delivery fees from restaurants and users, there’s another way DoorDash generates revenue. Suppose a restaurant wants to get ahead of the competition, as DoorDash features a variety of restaurants that users can choose from; they can opt to advertise their business, resulting in more chances of orders. For providing advertising on their platform, DoorDash charges restaurants additional fees. With this, the restaurants can be at the top of the list, and get a priority in the advanced search.
In recent years, there have been a variety of stories about the company’s future, its growth, its looses, and even mergers. There’s no telling what the future might bring but in all the craziness of 2020, DoorDash has proved its worth as a delivery platform.
Not only that, but the company also has announced a lot of new developments in the company’s structure.
The DoorDash journey has not been easy, and with all sorts of speculations in the air, the company has kept its hopeful demeanor. Not only that, but the company also has proven its worth during the 2020 pandemic, with its services. The recent developments such as the launch of the online convenience store earlier this year, the recent on-demand grocery delivery service, and its partnership with NBA, WNBA, and NBA 2K League; all these steps seem a positive continuation of the company’s model. It is too early to say if these steps will prove sustainable after the pandemic is over, but the company’s aggressive approach towards its goals seems to be turning into its favor for now.
Whatever the future may hold, for now, the company seems to be doing excellent in providing solutions to its consumer base, all the while earning the trust of the communities it impacts.