How DoorDash Became America's Biggest Food Delivery Provider

How DoorDash Became America's Biggest Food Delivery Provider

Two years ago, DoorDash was behind Seamless and Ubereats in the food delivery space. This month, DoorDash had an IPO which valued the service at a $30B+ valuation as American’s largest food delivery provider.

Taking over an incumbent such as Uber at the time is a David vs Goliath battle. Here’s how DoorDash did it. 

Focusing On Suburbs

DoorDash found that delivering to cities is hard. The customers expect to pay less, and the drivers expect to be paid more. There’s also traffic, and finding parking is extremely hard as a driver. When DoorDash shifted their focus to the suburbs, they had better fundamentals and even more people to cater to. While other services struggled in the cities, DoorDash thrived delivering to families in the suburbs.

DoorDash achieved product market fit by first launching in Long Island, New Jersey, Westchester, and Connecticut. Their business skyrocketed and were profitable in months.

Selection & Quality Over Price & Speed

With food delivery, you can compete on 4 things: Price, Speed, Selection, and Quality. DoorDash found it impossible to compete with Uber on Price and knew this wasn't going to be an area for them to play in. Uber also focused on speed, and DoorDash didn’t have the capacity to compete on that as well.

In their analysis, they found that there was a limited marginal benefit to customer conversion under 42 ETAs. As long as their deliveries were delivered in sub 42 minutes, customers didn’t really care how long it took for them to get their food.

DoorDashed focused on having the best selection on their service. They gave you a wide selection of all the best restaurants you want to order from. They also provided the best quality by making sure your food was delivered on time with everything, and the state you expect it in. This focus paid off and people trusted DoorDash and stuck with them as customers. 

The Merchant, Dasher, and Customer

DoorDash is a service business run and powered by people. DoorDash developed a competitive advantage by focusing on their customers first, restaurants, and drivers in that order. They often ignored merchant and driver needs but they weighed all sides equally.

By treating their merchants & dashers the right way, they became allies and not adversaries. This allowed restaurants to trust DoorDash more vs. the competition. From the host at the front desk, the store GM, and to the business owner. 

Takeaway: DoorDash is a great example of how your business can come into a market that is dominated by large incumbents and still offer a valuable service with a 10x experience. If your business is in a space that has intense competition, look for areas in the market where big competitors are not focusing on. Once you find it, double down on that and provide your customers a great experience. 

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