Ding-Dong DoorDash

Hey everyone, I hope you all had a great Thanksgiving break! This week I am going to talk to you about one of my favorite startups, started by a group of Stanford University students in 2013. DoorDash is a food delivery service that allows customers to order their favorite local restaurants to their homes or work, for a flat delivery price of 4 to 7 dollars.

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I have been using DoorDash since 2014, and I must say that the service over the years has only continued to improve, and the quality of the mobile application has much improved as well. One of the reasons for my satisfaction with their service is the steady increase in quality of delivery person. When DoorDash came to Boston in 2014, I was always a little creeped out by the suspects delivering my food.  Reflecting though, I am not so sure it was that the delivery people did not know proper delivery customs or educate. While other restaurants have been delivering food for years, I think that the DoorDash delivery experience was intended to be more professional and catering, and even deliverers who had done this for a living before were thrown off. This is why I believe it took a while before DoorDash’s workforce started to truly capture the first-class brand image that has made them so successful to this day.

On the business side of things, DoorDash has had a successful go, being  valued at 700 million dollars, a valuation the owners were disappointed with! The owners aimed for a 1 billion dollar valuation and missed their mark. Market analysts product this was due to growing competition and struggles to maintain their workforce. Many similar companies are jumping on the food delivery train and some of their top competitors include Postmates Inc., Sprig Inc., Munchery Inc. and GrubHub. Along with this, one of the other biggest startups in recent years,  Uber Technologies Inc. plans to expand a full-scale food-delivery service into 10 U.S. cities soon, and they plans to expand nationally.

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Despite all of this, I believe that DoorDash already has such a big foot in the door that it will be hard for newcomers to take over. Along with this, I have tried Postmates, and while the food options were more upscale, I think DoorDash delivered in much lower time, at a cheaper cost and most importantly had better service. Additionally, while Uber is looking to break into DoorDash’s market, I do not think people will adapt Uber’s new change well. I think people have slotted Uber as the company that will take you to your favorite restaurant, not deliver it. Uber has tried something similar in 2015 with ice-cream delivery, and that did not go nearly as well as planned, and actually  upset many drivers normal schedules and hurt their profits.

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One key thing that intrigued me when researching DoorDash, was their CEO Tony Xu, who has ambitions of pushing DoorDash into the delivery of other items outside of just food. Xu is proud of the company’s analytics and delivery metrics that it uses, and claims they are heavily the reason for DoorDash’s success. As mentioned before, DoorDash’s delivery is faster than I have ever seen out of a delivery company, and I believe that their undisclosed analytics system, along with real time delivery system might give them an upper hand on many companies such as Amazon.

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Overall, while DoorDash may have not have cracked its goal of a 1 billion dollar valuation, but it has forever broken into my heart. I encourage everyone to download the app and order dinner tonight! I know if I would have had no one to eat Thanksgiving with, DoorDash would have been my first call. See you guys in class tonight and happy holidays!

 

 

7 comments

  1. I’ve actually never heard of DoorDash, although I have heard of and used their competitors like GrubHub and Postmates. I’m now tempted to try it out. I’m curious as to how successful delivering products other than take-out food would be – I know Instacart and Peapod deliver groceries, but those services still haven’t caught on to the same degree that services like DoorDash have. I think delivering household necessities like shampoo and toilet paper (I think there are already services that do this) would be convenient, but I’m curious to see how and when these will be widely used.

  2. cattybradley · ·

    Great post! I have heard of DoorDash but have never personally used it – normally I use Postmates or UberEats (it’s available in NYC!). I agree with @socialkatietu that delivering convenience products. You made a good point that people typically think of Uber as a ride to a restaurant, but personally I really liked their delivery. It was super quick and easy to use, however I see the benefits of being more focused one service like DoorDash is. I will check it out soon!

  3. Great Post! I had never heard of doordash so I would have loved more background in it as I was reading. I will likely look into it some more. All of these technology spaces are getting so crowded now with competition from niche companies such as doordash and larger companies such as Uber. It’s the same trend we see happening in the music streaming services. Niche startups like Spotify competing with larger companies such as Apple and Amazon. I wonder if these smaller startups can survive against the size and predatory pricing of these behemoth competitors. It is a but of a David vs. Goliath battle.

  4. cmackeenbc · ·

    Nice post! I am familiar with DoorDash, but have yet to use the service. I just read an article, though, on how they expanded their application in the newest version–you can now order through iMessage if you have the app! Their goal was to allow for groups of people in a message to collect orders and keep it all in one place, which seems really smart to me. I like your analysis of the delivery app industry, and I think you are right that Uber will have trouble successfully expanding their service to include food. If they really want to succeed, they should probably buy or merge with a tech firm like DoorDash already in the business that can guide their efforts. This would probably be mutually beneficial for the food delivery company as well, as Uber’s investment in self-driving cars might help better prepare that company for food delivery systems of the future. Overall great post, thanks for a nice read!!

  5. Great post. Living 15 minutes away from Stanford, I have seen many DoorDash employees running around the Bay Area (in fact, some of my friends have worked for them as well). This is definitely an extremely competitive area to be in right now, given that there is so much competition. What interests me about this field is what will really be the point of differentiation for companies. Uber has a huge advantage because of the immense set of vehicles they already have going around the nation. This becomes a little bit more difficult if Uber becomes driverless, though. From my personal experience back at home, I think DoorDash has carved a nice niche in the Bay Area, especially with the younger demographic. It’ll be interesting to see them grow. Thanks for sharing, Mike!

  6. Tyler O'Neill · ·

    Great post! Unfortunately I am a loyal customer of Foodler since they utilize DASHED delivery service, which was founded by a BC alum. I have ordered from DoorDash before however and was very impressed by the service. It seems to me that people have recognized the potential in the food delivery industry, and companies with a similar business model (ie. Uber) have tried to incorporate similar services. I ultimately agree that the first mover advantage will be extremely helpful for DoorDash to maintain their dominance.

  7. Although I’ve personally never used DoorDash, it sounds like a great delivery platform since it saves you the convenience of having to deal with different qualities of service depending on the delivery from each local restaurant. However, as a cheap college student, the idea of a $4-7 delivery fee is pretty high compared to the usual $2-3 if I have the restaurants directly deliver. I think that’s a cost that’s going to have to be adjusted according to the cost of living within regional markets DoorDash tries to enter.

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