How Does Doordash Work?

What Is DoorDash?

DoorDash is an on-demand logistics set-up. It is an intermediary that works as a liaison between sellers and buyers who want products to be door delivered. DoorDash was founded in 2013. At present, it works only on food delivery.

DoorDash’s business model is designed in such a way that it benefits both restaurants selling quality food and the ones looking to enjoy them. On one hand, DoorDash facilitates users to find restaurants of their choice and order food. On the other hand, it opens a profitable avenue to restaurants and helps them gain access to a wider customer base. Apart from this, it also provides several employment opportunities to freelance agents delivering food.

DoorDash has successfully raised a considerable amount of funds ever since its inception in 2013. It has now tied up with several leading restaurant chains situated in major cities across the USA. It is always advisable for restaurants to rely less on third parties and use a restaurant website builder to manage digital business on its own.

The Restaurant Food Delivery War - Who Wins the Game?

DoorDash and UberEats are experiencing a surge in average sales per customer, especially after the pandemic situation set in from 2020.

In addition to the number of customers ordering from food delivery services increasing steadily, the average sales per individual has also increased over the past two years.

Average Sales Per Customer (Comparison between 1st quarter of 2020 & 2022)

-DoorDash – 90% higher in 2022 than 2020

-Uber Eats – 72% higher in 2022 than 2020

Mode of Revenue Generation-How Doordash Does Business & Earns Money

This is the model of DoorDash’s revenue generation. It makes money this way:

i) Commission Per Order:

When customers make food orders online using DoorDash, the delivery agent picks up the food from the specific restaurant and delivers it at their doorstep. For every order successfully delivered, DoorDash charges a minimum 20% commission from restaurants.

ii) App Marketing & Advertising:

Doordash also charges restaurants that use the app for their marketing and advertising campaigns. Restaurants must pay DoorDash a commission to top the list of restaurants for a limited time and also for pop-up advertising in advanced searches.

iii) Delivery Fees:

The app’s own drivers are called Dashers. The delivery charges depend upon the distance and also the kind of tie-up that DoorDash has with the particular restaurant. On an average, the delivery fee ranges between $5 to $8 for every order.

Why Is DoorDash So Popular?

DoorDash owns a greater portion of the market than the market owned by UberEATS, GrubHub and Postmates together

Several third party food delivery apps gained immense popularity especially after the pandemic situation set in, restricting people to their houses and depriving them of the pleasure of dining out. Restaurants that closed service for dine-in had no other option but to resort to an online mode of business.

Of all the food delivery apps, DoorDash is extremely popular because it is always operational.

The Future Of DoorDash:

The operations of DoorDash, a triple-sided marketplace, are powered by technology to a great extent. It is also continually evolving to suit the growing demands of customers ordering from their homes and the restaurants delivering it to their doorstep.

DoorDash has 56% market share in the food delivery industry.

DoorDash has introduced an innovative rating system known as the ‘Delight’ score. It is a rating scale with maximum 10 points. Factors like delivery quality, customer satisfaction and restaurant popularity are included in this rating scale to achieve an accurate estimate of how customers can be delighted. This score will aid the app users to select a restaurant for placing orders. In due course, DoorDash aims to become an authoritative source in this domain.

At present, DoorDash is concentrating on food delivery alone. But, it is expected to soon set foot into other spaces, providing tough competition to other players in the on-demand logistics platform.

Tips That Will Ensure Successful Delivery Operationsi) Food Must Travel Well:

Restaurants can enhance the efficiency of takeout operations by creating a streamlined menu that features only a limited number of items. Popular items can be included. But, only those items that will not turn soggy during packaging must be chosen for the delivery menu. Sauces must be packaged and sent separately so that the order does not turn into a soggy mess by the time it is in the customer’s hand. Hot and cold items must be sent in separate packages and hot food containers must be provided adequate ventilation. The fleet of ‘Dashers’ will transport food in insulated delivery bags to maintain the temperatures of hot or cold food.

ii) Menu Optimization:

The menu must be updated to include only high-margin, best sellers and dishes which can be cooked in advance. This will ensure an effective off-premise operation. Upselling techniques can be undertaken by offering add-ons like extra toppings to salads, burgers, health bowls and more.

iii) Monitoring Incoming Orders:

If restaurants do not have a POS integration system, then it must have a staff to keep a close eye on incoming orders. In this way, the restaurant can ensure that new orders are quickly noted and sent to the chefs in the kitchen for preparation.

iv) DoorDash Promotional Facility:

Joining DoorDash enables restaurants to gain access to a wide range of marketing promotions to elevate the business. ‘Try Me Free’ and ‘First Order, $0 Delivery’ are very popular promotions of DoorDash which restaurants can use to attract new customers by promising them free delivery on the first order. Using the ‘Order Again And Save’ option, restaurants can also offer incredible discounts to their patrons by getting a prime placement on the app’s home screen. Restaurants can also enjoy an added advantage by joining DashPass

• a subscription service of DoorDash that caters to the needs of the most frequent customers.

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How Does Doordash Work?

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