DoorDash: Business Model & Revenue Sources
DoorDash has grown rapidly into the on-demand food delivery market. Food delivery app DoorDash has outpaced GrubHub, Uber Eats, Postmates, and other players with an estimated 35% marketshare. If you are planning to build your on-demand app like DoorDash, let’s find a quick answer to all the questions. How does DoorDash work? Which business model they follow? How do they generate revenue?
In this article, we will reveal in-depth knowledge of the DoorDash business model as well as how DoorDash works for dashers and restaurants to achieve massive success in rapidly-expanding field.
But before that, let’s start simple!
What is DoorDash?
DoorDash is considered as one of the largest third-party delivery services in the USA. It provides food delivery platform to the users where they can find the best restaurant and order the food. Moreover, DoorDash can fulfill your demand because it gives access from the restaurant to its extensive customer base.
Initially, how does DoorDash work? This whole DoorDash business is designed efficiently to benefit users and restaurants. Jeff Cosgriff, iOS Engineer at DoorDash said they serve a three-sided market, which provide a different value to each side. He added:
For merchants, DoorDash provides a way to deliver goods and a new channel to acquire customers. For consumers, it’s a way to discover new shops in your neighborhood and it’s a huge time-saver. We also provide flexible work and meaningful pay for Dashers.
What is the success story of DoorDash?
DoorDash facts & statistics
- Founders: Andy Fang, Stanley Tang, Evan Moore & Tony Xu
- Year of Foundation: 2013
- Headquarters: San Francisco, California
- Funding: $2 billion (As of June 2019).
- Valuation: $12.6 billion (As of June 2019, according to Quartz).
The successful timeline
After that, let’s take a closer look at DoorDash features which back its business plan and revenue growth.
Top 5 DoorDash features that make it stand out
- A pre-delivery option. Customers can easily schedule their order even one week before. Therefore, a lot time is saved on each order especially in the peak time of festivals.
- Dual rating features. With DoorDash, rating for the food and quality other for the dashers is easy.
- Usage of AI. This food delivery app works on artificial intelligence to suggest a list to its users, which is based on the people’s choice.
- Live tracking. Its customers with live tracking features can track where the food has delivered after ordering. They also receive regular updates about the position of the delivery on their device.
- Top menu option. This helps users easily discover the top foods that have been ordered by numerous customers from a specific restaurant.
Why is DoorDash successful?
DoorDash joined a competitive market, but it came out on top. By December 2019, the brand dominates market share in the third-party delivery space. DoorDash earned 49 percent of U.S. consumers’ meal delivery sales in September. While Uber Eats edged out Grubhub for second place with 22 percent.
How does DoorDash work to knock other competitors in a dominated market?
Being technologically-driven
DoorDash uses its cutting-edge tech that makes the brand stand out. For example, it integrates with its partnered restaurants and provide them an advanced data to help them understand more about customer behavior.
Chipotle’s site features DoorDash integration that allows the restaurant to have DoorDash deliver orders while maintaining access to live order updates, customer feedback, and localized delivery information.
On other side, for customers, DoorDash is designed to be easy to use. Users can see a rating from one to ten that’s based on a combination of delivery quality, customer feedback, and overall popularity.
Different from competitions
While the inner city is full with delivery services, DoorDash focuses on the outside, where people had far fewer delivery options available to them. By using this growth strategy, the location-based app provide the most value, fill a need, and grow their brand.
The well-recognized brand
DoorDash consistently delivers killer integrated marketing campaigns. Hence, products, engineerings and brand are tightly linked, helping them to deliver the very best results.
Keeping their options open
Not only being third-party food delivery, DoorDash set up to establish itself and then expand its product offering.
Our vision is definitely last-mile logistics, so we started with restaurant food delivery. We now do grocery with Walmart, and you’ll see more expansion in the years to come.
Read also: Super App Strategy: How To Make A Profit From Super Apps
What are DoorDash value propositions?
The DoorDash business model focuses on all three segments and keeps them well connected to each other. It empowers the drivers with restaurants and customers by tracking the driver’s location as well as predicting the delivery time.
How does DoorDash work for its uses?
- Track the driver’s location after placing an order.
- Customer service is available 24/7.
- Choose reliable restaurant menus just involving click.
- A better solution to save money and time.
For restaurants:
- The third-party delivery platform provides marketing and promotion campaign.
- Offer an extensive customer base.
- A cheaper way to reach customers, especially if you are small business.
- No need to hire own delivery man.
For Dashers:
- Earn income.
- Have chances to get tips from customers.
How does DoorDash satisfy the craving for on-demand delivery platform?
To build strong relationship with targeted customers, DoorDash has taken amazing steps. The brand uses all social media like Facebook, Twitter and Instagram to reach larger users as well as to stay in touch with their regular ones. It also provides 24/7 online support to users such as feedback, ratings, and suggestions.
In addition, DoorDash is reaching more customers via email, which offers them gift cards and promo codes. This approach not only keeps customers reminded, but also gives the facility of contacting someone need.
Read also: How to build food delivery app like Uber Eats?
How does DoorDash work?
DoorDash delivers restaurant food right to their customers’ tables, sometimes in less than 15 minutes. How do they do it? Because of engineering a logistics and operations system, DoorDash helps consumers get what they want.
The ordered food is picked up by DoorDash’s Dashers and delivered at the customer’s doorstep. It helps customers get quality food more conveniently. The restaurants also find new customers through the DoorDash app.
So, the DoorDash business model is designed to benefit all the three segments, which include:
- Customers.
- Restaurant owners.
- Deliver providers.
Let’s take a look at how DoorDash works in following four steps!
Place an order
From a wide range of restaurants, customers can easily select their preferred food. With AI integration, users also get recommendations for new choices, based on their previous orders. Features such as search, nearby restaurants, making choices based on categories, help the users for better sorting as well.
Make a payment
With the help of in-app purchase, users can make the payment recently. Once this process is done, the order gets transferred to the driver and the restaurant as well, which help them to know what food to prepare and what were to deliver. DoorDash shows the total payment including the app service charge too. Hence, they can easily see what and how much transaction has to be made.
Track the order
In this features, customers can watch and track the order to know where their order has reached. On the other hand, when the orders is ready from the restaurant, the Dashers pick it up and start toward the delivery location. This also provides with the facility to contact to the driver if you want to regarding some point.
Get order at doorsteps
The endpoint of process is when the driver reaches the customer by tracking the location and delivering the food. Dashers’ goal is to be as efficient as possible. The fee for delivery goes to the company. And the company pays dashers for their work. DoorDash provides the tip option to the customer. However, making a payment is total up to the customer.
You’ve already answered the question “How does DoorDash work?”. It’s basically the on-demand food delivery platform. Users can order their favorite foods from the website, or through an application.
Read also: Location Based App: How To Build a Geolocation App [Full Guide 2020]
DoorDash business model canvas
The restaurants
The key roles of this platform is to connect foodies with their favorite restaurant and helps them to get the food delivered right at their doorsteps. As the results, businesses have a lot of reason to be with the app.
- If you don’t have any delivery services, partner with DoorDash. Because the brand has its efficient transport network for any food businesses.
- With DoorDash’s popularity and wide range, these restaurants can reach a new audience.
- Businesses that don’t have a proper plan can enjoy the benefit of food delivery with DoorDash.
Users
- People who love food but don’t have time to go out can enjoy DoorDash.
- Food lovers who love to order food through an advanced platform, or can’t cook for some reason.
- Users can use multiple payment options like debit and credit cards conveniently.
- Take advantages from discounts by ordering food through this platform.
Dashers
Dashers get a flat payment for their deliveries. Tips from customers are a big part of Dasher’s motivation to work for DoorDash. Dashers can set their working schedule with adaptable timings. It is easy to be a dasher, and the benefits are worth the effort.
Above all, every segments can benefit in one way or another from DoorDash. Now, let’s take a look at the Revenue model of the company.
How does DoorDash make money?
If you are entrepreneur willing to enter into On Demand Logistics or food delivery startup, understanding the revenue model of DoorDash is vital. How does DoorDash work to continually win the confidence of the investors?
Delivery Fees
DoorDash charges an average of $5 to $8 per order, depending on the distance travelled, time of day and its relationship with the restaurant where the order has been placed. Deliveries are fulfilled by DoorDash’s own team of hired drivers, known as Dashers.
Commission
The startup also takes a commission fee, usually of 20%, from restaurants for every order.
That fee is much higher than what its competitors reportedly charge. According to Vator, Delivery Hero charges between 10% to 11% on each order, while GrubHub is said to take a 13.5% cut on average.
The fact that DoorDash is able to charge more indicates that it has a decent amount of sway over restaurants. Kurt Kane, Wendy’s chief concept and marketing officer, said DoorDash became its “lead horse” because of its focus on quality, adding that “the food almost always arrived hot,” reported Bloomberg.
Restaurants Pay for Advertising
DoorDash is so popular with restaurants that it is also able to charge them for marketing and advertising. The company charges an extra commission to restaurants who want to appear at the top of search results on its app.
The future of food delivery industry
The pandemic will have a long-lasting impact on the food industry, especially the restaurants offering dining services. As a fact, the restaurants that offer food delivery services say that they are generating incremental sales.
DoorDash business model can prove to be very beneficial for almost all the delivery business. They can leverage the fruit of success in their business field after considering the same business model into their online food delivery segment. Then, check how DoorDash works to keep the local businesses going and carry on through these challenges.
Our experience
Are you willing to join food delivery industry with better features and strategies? Do you look into ways to reduce app development costs? If you are interested in building an on-demand application like DoorDash, let’s connect with our experts now.
Just contact us at contact@agiletech.vn or via (+84) 936 281 059. We will give you a step-by-step guide to get started:
- Define a full scope of work includes functions, UX/UI design, prototype
- Set an estimated budget and plan your resources
- Testing
- Delivery
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