How DoorDash works/ Business model explained

You have probably already heard of Uber-Eats and other big players in the food delivery industry. However, would you like to know more about how they really work and why is their business model so successful?

According to eMarketer, the market share of DoorDash equaled 45% in 2020, when it comes to on-demand food delivery app usage. It is estimated that there are more than 20 million DoorDash app users in 2020. 

Are you planning on launching your own on-demand delivery app? 

In this article, we will go a bit more in-depth, as to how Doordash operates. Including the technology behind their application, as well as why it is so attractive to customers and restaurant partners.

What is their business model based on? 

DoorDash is popular among over 4000 cities across the United States. It offers hyperlocal on-demand food delivery from restaurants and stores. 

Their partnership works in a way that the restaurants are allowed to set their own prices on the menu, however, DoorDash has control over the delivery and service fees. Depending on the type of partnership, restaurants pay a flat fee per order, a monthly fee, or a commission based on how much money they make on a particular day. 

Why do restaurants like to partner with Doordash? 

Driver solutions

As of October 2020, there are more than 310,000 restaurants and stores registered in DoorDash globally. One of the reasons why it is a convenient solution for restaurants is the reliable delivery system. DoorDash offers its own drivers (called Dashers) and delivery solutions. Therefore, the restaurants themselves do not need to worry about hiring drivers and managing their payments.

The restaurant gets to choose their online menu available on DoorDash, and it is a great benefit for them to delegate the delivery to a third party. If any issues arise, the customer is most likely going to contact Doordash directly and not the local restaurant. 

Analytics 

As a restaurant owner, you may choose the option of data analytics when you collaborate with DoorDash, called the DoorDash Merchant Portal. This system helps restaurant owners to understand their business and to work efficiently, as well as manage their inventory. 

The portal allows tracking of sales, adjusting menu options, and tracking different metrics like average order size, most popular menu items, etc. which would not be possible to measure accurately in-house. 

Having this type of order management system in place is a great advantage to all businesses. It provides inventory control, helps maintain clarity on how to prepare for the busiest hours of the day, makes staffing decisions, and much more. 

Opportunity for small businesses

The revenue of this ordering app equaled 1.24 billion in the second quarter of 2021, which is up 83% from the year before. The exponential growth of the company and its increasing popularity, make DoorDash a safe company to partner with, as it ensures exposure, particularly for smaller businesses, which do now have an established customer base just yet.

What makes Doordash appealing to customers over other brands? 

Speedy delivery 

DoorDash application offers users to schedule their deliveries to a specific time and track the driver’s route in real-time. They also offer a variety of payment options including credit cards and Apple Pay. 

Another big reason is the delivery time. Statistics show that the average delivery time of DoorDash was 30 minutes in 2020, 90% of orders were delivered in 30 minutes or even less.

Maintaining a low delivery time average definitely separates this app from the competitors, as waiting time is one of the most common customer complaints. 

Perks for new subscribers 

One of the unique selling points that attract customers to DoorDash over other platforms is the fact that they offer a $0 delivery fee for an entire month after subscription. 

As an owner of an on-demand delivery app, it is crucial to adequately promote the clear benefits of ordering with your app and what distinguishes you from the competition. It requires preliminary research and find out what the customers that you chose to target value the most. Is it specific payment methods, real-time tracking, member discounts, or app usability? 

To sum up

DoorDash is a great example to get familiar with if you are looking to start your own on-demand delivery business. 

They offer an excellent variety of options and an easy-to-use app, which attracts millions of consumers globally. This hyperlocal business model is beneficial not only for the customer but also for the restaurants that they partner with.

DoorDash offers a wide variety of data analytics for restaurants to improve their management and become more profitable. They have great delivery solutions that will match your needs and consumer demand, as well as perks and benefits for first-time users and the convenience of different payment methods. 

Are you ready to get started in the e-commerce world? 

If you have a vision and an idea for an on-demand delivery business, but you are not an expert in technology, book a call with us!

Ordering offers plans that let you fully set up your website and app in less than a week, without any coding or developer skills.