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How DoorDash Won the Food Delivery Wars 🚲

PLUS: Trending Tools ⚒️

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Here's what we're serving up today:

  • How DoorDash Won the Food Delivery Wars 🚲

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  • Trending Tools ⚒️ 

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How DoorDash Won the Food Delivery Wars 🚲

It’s 2016 and Grubhub is the market leader in the food-delivery wars having a formidable market share of 70%.

A 4 year old startup by the name of DoorDash sits at a measly 5% share. However, fast-forward to 2024 and DoorDash has astonishingly captured a market share of ~67%

What fueled this meteoric rise? Let’s have a look.

Operating at the Lowest Level of Detail

In 2012, a small class project at a Stanford class, Startup Garage laid the groundwork for what would ultimately become a major disruptor in the food delivery industry. The project, initially named Palo Alto Delivery, ultimately evolved into the present day company - DoorDash.

The company started out with the problem statement that they still solve to this day - Food Delivery.

During the initial months, the founders of DoorDash - still students at Stanford - spent their nights moonlighting as delivery drivers, allowing them to engage directly with the challenges of food delivery. 

The founders micro-analyzed the entire process of the cycle - from pickup to transit to delivery. They identified the numerous steps in the process, what the corner cases could be and at each step, asked the whys, doing analysis to get to the lowest branch of what the actual problem is. 

This methodical exploration of challenges became ingrained in DoorDash’s ethos as “Operating at the Lowest Level of Detail”.

As a result, little insights like these would compound into the understanding to build the company’s vision and strategy. This ultimately led the founders to realize that solving the food-delivery problem was essentially a logistics problem.

Here’s an excerpt from DoorDash’s Story Medium post:

Ultimately, our vision is to build the local, on-demand Fedex. We are a logistics company more so than a food company. We help small businesses grow, we give underemployed people meaningful work, and we offer affordable convenience to consumers. We’re tackling some of the most difficult logistical challenges that come with on-demand delivery — both in engineering and in operations. 

Travel the Road Not Taken

Doordash wasn’t the only food delivery company in town. Grubhub was started over a decade before Doordash. Uber had launched their delivery service, Uber Eats in 2014.

However, these companies had different target audiences. Grubhub and Uber Eats were laser focused on city areas. Cities offered high-density populations and apartment folks tended to eat out more, so the supply and demand sides were more attractive. 

Doordash, however, decided to play in a different arena. They focused on winning outer suburbs with large family homes - a largely ignored segment with significantly higher Average Order Value (AOV) than cities.

They connected with suburban restaurants lacking in delivery infrastructure, quickly integrating them and their existing customer bases into their platform. 

Serving families in suburbs generated more revenue than city apartments. By prioritizing the suburbs, Doordash won the restaurants without delivery services, often with pre-existing customer bases, rather than competing for newer restaurants with multiple other providers.

This strategy also helped them win the pandemic. When COVID hit, Americans flooded cities and ended up in suburbs, exactly where DoorDash specialized and had been bringing restaurants online for years. As a result, DoorDash captured an even bigger share of the market during the pandemic.

Offer Value to Restaurants

DoorDash has built its brand identity on offering more than assistance with just food deliveries. While many of their competitors can help restaurants reach a wider audience, few actually provide resources to empower the restaurants. 

DoorDash acquired restaurants by providing them with not just delivery services, but insights they never had before - popular dishes in the area, customer demographics, local delivery times and more. 

DoorDash’s Merchant Portal

Superior tooling like the Merchant Portal and Business Manager mobile apps, plus native marketing features like Sponsored listing and promotions give restaurants a suite of capabilities to optimize their own services.

Because many local, smaller restaurants cannot afford to gather such extensive customer and brand insights on their own, these features became magnets for acquiring new suppliers that were less exposed to product innovations in the sector.

☄️ Asteroids ☄️

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Tesla intensifies layoffs, axing hundreds including senior executives and most of its Supercharging team, following a previous 10% workforce cut. 🚗💼

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