How DoorDash Business & Revenue Model Works and Generate Revenue?
What do people do nowadays when they want to enjoy their favorite dishes? They go to the restaurants to enjoy their favorite food or else they order their favorite food using an online food delivery app. There are many online food delivery apps are available.
As per a survey, on-demand food
delivery services are increasing drastically with each passing year, it’s
predicted to reach 365 billion $ by 2030, which is increasing by the rate of
20% annually.
There are many online food delivery
apps are available, but DoorDash is one of the most successful business models.
If someone thinks to enter food delivery business then he/she must know what is
DoorDash? How DoorDash works? Which business model do they follow? How do they
generate revenue? So, let’s discuss how they are achieving massive success.
What is DoorDash?
DoorDash is an on-demand online food delivery service,
launched in 2013 in Palo Alto, USA. This is founded by Stanford students Tony
Xu, Andy Fang, Evan Moore, and Stanley Tang. The company's
head office is in San Francisco, USA.
DoorDash is the largest delivery service provider in the USA,
Up to December 2019, it has generated total revenue of 900 million$.
The company was established in Paulo
Alto. It has expanded in more than 4000 cities and 340,000 stores approx across
the USA and Canada.
How DoorDash Works
DoorDash works in 4 steps
Choose
order
When
it comes to eating users have a lot of options to choose from a large
collection of restaurants with a variety of menus. Users can see the top
recommendations based on their previous orders. Users can choose from all the
options available and can place their orders.
Payment
After
placing the order user can pay for the order within the app. Charges are
calculated based on the price of the dishes & delivery location. After the
payment, the order gets forwarded to the respective restaurant.
Track
order
The
restaurant receives the order and prepares the food. When the order is ready at
the restaurant, delivery personnel picks it up from the restaurant and go
toward the delivery location. Delivery personnel can pick up orders whenever
they have downtime, using the app.
Users
can track the status of orders through the tracking feature available on the
app. With this users can have an estimated time of the delivery.
Delivery
Delivery
personnel’s goal is to deliver the order as soon as possible. The Payment of
the delivery goes to the company, and then the company pays delivery personnel for
their work. Delivery personnel usually get tips from users. Users can rate their
experience with the delivery personnel, the delivery, and the order, using the
app.
Business
Model of DoorDash
DoorDash has a Y-structured business model. It includes the
users, the restaurants, and the people who are willing to work as delivery
personnel.
The delivery personnel associated
with the DoorDash are known as Dashers.
Let's discuss the Y-structure
business model of DoorDash.
The users:
People who love
to try new dishes but don’t have time or the energy to go out to eat can enjoy
food ordered from DoorDash.
The corporate
offices that have no time to waste, can order with DoorDash without
compromising their schedules.
Students who don’t have a kitchen in
their apartments, People who don't know cooking and have to eat out can enjoy
DoorDash service.
The restaurants:
Restaurants are
an integral part of this business model.
DoorDash has a
lot of attractions of Restaurants that don’t have home delivery services,
DoorDash has an efficient transport network, and so, it is an asset for any
food business.
With the
popularity and wide range of DoorDash, restaurants can be benefited and reach
new customers.
Restaurants that
don’t have a proper sitting arrangement can enjoy the benefit of home delivery
from Doordash.
Dashers (Delivery personnel):
People, who are looking for flexible jobs, are fit to
work as Dashers. These candidates need to have a delivery vehicle. People
looking for a job with excellent tips can be the part.
Dashers
can get tips from customers, if they’re efficient they are more likely to get
great tips. This is a big motivation for them. They get paid for their
deliveries on weekly basis, usually, they earn more than 600$.
Dashers can set their work schedule as well. The benefits
are worth the effort.
DoorDash Revenue Model:
Investors are showing a lot of
interest in DoorDash because of its revenue model.
To
attract investors any business needs to show robust returns. Then only
investors show interest in backing such ventures. DoorDash has shown continuous
growth in the market and won the confidence of the investors.
DoorDash
generates revenue from its three main revenue sources. Let’s talk about that.
1. Business Commissions
DoorDash
provides businesses to restaurants with means to reach their potential
customers. DoorDash makes it possible for any user to order from their favorite
restaurants, even if those restaurants do not have delivery services. It is a
tremendous service to the food joints that cannot afford to have a delivery
service or want to focus on their products rather than the delivery.
DoorDash
gets commissions from the business for providing delivery services, which is
usually 20%. Restaurants will definitely pay the commission because it drives a
lot of traffic to their food joints.
2.
Delivery Fee
DoorDash
has a strong transport network, and it employs delivery personnel, called dashers,
to deliver orders placed by the customers. These dashers get payments from the
company. And according to their performance, they also get tips as rewards from
the customers.
DoorDash
gets a commission from the restaurants to get the orders from the customers.
With that, DoorDash also charges a delivery fee to the customers, which ranges
from 5 to 8 $ per order.
3.
Advertising
Along
with the commissions and fees, DoorDash also earns revenue by Providing Advertising
services to restaurants. Businesses are listed on the app for the users to see,
but they don’t get any preference and are dependent on the user reviews.
By
Advertising, a business can get preference and can come to the front on the
lists, and can reach more people. It is the main factor of DoorDash's revenue
generation. Advertising allows businesses to leverage the reach of DoorDash.
DoorDash’s features For Customers:
·
Great User
Experience
·
Competitive
Prices
·
Tracking Order
via App
·
Customer
Service 24×7
·
Wide Range of
Restaurants & food joints
·
Multiple
Payment modes
·
Advance Parcels
Booking
·
Safe Delivery
DoorDash’s features For Restaurant Partners:
·
Exposure
·
Bigger Customer
Base
·
attraction For
Their Business
·
Marketing For
Restaurants
·
Give Customers
A Unique Experience
·
24×7 Customer
Service Available
·
Empowering
Small Businesses
DoorDash’s features For Dashers:
·
A Source of
income
·
Receive Tips
From Customers
·
Anyone with a
vehicle can join
·
Flexible
Delivery Hours
·
Work As
Independent Contractor
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