How does DoorDash works? | DoorDash Business Model

Published by Sumayya Siddique on April 14, 2020

America’s one of the famous online food Delivery service- DoorDash has lifted up the food delivery industry. During the initial stages, DoorDash began as a logistic delivery service and later on it was switched just to food delivery service.

The startup was based on San Fransisco. The business model of Doordash is well designed that it makes sure that all the three parties benefit from their service. A brief idea of the working process of DoorDash involves, letting the users place orders from the listed restaurants and letting the restaurant manage their orders and delivering them to the user’s location through delivery persons.

From 2013 itself the company was exposed to a larger tier of investors that helped them raise funding.

In this article, you will come across the common concerns regarding the running of this startup and how they earn money.

DoorDash Business Model

Foundation of DoorDash Food Delivery Service

The company was founded in June 2013 by Tony Xu, Andy Fang, Stanley Tang, Evan Charles Moore. With more than 13 billion dollar worth, DoorDash is the biggest online food delivery chain.

The workflow of Doordash is simple. It begins like this.

The system provides the users with the list of dishes and restaurants that are of their interest. This AI method is implemented using the previous choices of the users. Besides this feature, the ‘Top Menu’ in the DoorDash Application shows the users a list of top dishes that are loved by a majority of the DoorDash users. This feature enhances the food ordering experience.

Once decided upon the dish, the user can place the order by making payment. Once the food is ordered, it is up to the respective restaurant whether toa accept the order or not. Usually, the restaurant declines the orders when the food item is out of stock or some ingredients are missing.

Every order made through the DoorDash app an be easily tracked. This is made possible by sharing the live locations of the delivery person also known as dasher. Once the order is delivered the app provides a dual rating system, which lets the users rate the food quality and the service of the dasher.

One main feature that we see in the DoorDash app is, they let the users schedule delivery in advance.

The Success Mantra of DoorDash Food Delivery service

With the best in the industry, DoorDash has swept the heart of the foodies. And this makes the business model of DoorDash standout. The Food delivery charge lies between 5 dollars and 8 dollars. Approximately, a dasher can earn more than $600 every year.

Even though in the initial stages, the food delivery service was just based on San Fransisco, later on, it was spread to about 20 places including Canada.

Revenue Model of DoorDash

The services offered by DoorDash are so at reasonable prices, which leaves us the question of how Doordash makes money. As the online food delivery service, DoorDash holds the share of 35% of the market and it has put the all-time runner up, GrubHub in the second line.

While planning the revenue model, Doordash has made it quite strategic so that the amount spent on the business and the profit generated is on track.

For the services offered by DoorDash, it charges some cost which includes the sales price, maintenance price, and Dasher’s delivery charges. And here are the channels from which DoorDash earns.

Merchant Commission

The startup has tied up with 900+ restaurants to makes sure the DoorDash customers are presented with the best Menu. This has also become beneficial for the local restaurants that are facing high competition in the market. Thereby the revenue generated by DoorDash comes from the restaurants.

For every order placed, DoorDash charges a commission of 20% from the restaurants.

Restaurant Advertising

To help boost sales through the DoorDash App, it lets the restaurants advertise themself in the DoorDash App. For the restaurants that have signed up for advertisement, the services of the restaurant are displayed on top of the app. This helps the restaurants increase their visibility and thereby increase the number of orders placed.

Food Delivery Charge

Besides advertising and merchant commission, the food delivery fee is one main source of revenue for DoorDash. For every food delivery orders that are placed in the app, a delivery fee is charged depending on the distance between the restaurant and the delivery location. This normally ranges from $5 to $8.

Operation modes of DoorDash

The Doordash business has two operation methods. Initially, the whole online food delivery system was carried out through their website. Through the DoorDash Website, the users can order food. They need to log in or signup before every order is placed. For this DoorDash provides social logins for websites and also te users can signup using their mobile numbers.

With the hike in the demand for mobile apps for online services, DoorDash launched a mobile app for iOS users. Later on, they build their Android application by approaching the best on-demand app development company.

Through the app, the users are permitted to search the nearby restaurants and make quick orders easily.

Looking to build an app like DoorDash? See how the FoodClub app was developed successfully like DoorDash.

Tomorrow of DoorDash

As of now, the DoorDash business operates in 75 main cities in the USA and Canada. And presently the company is looking to expand to more places by adding more restaurants into the app. Which means new job opportunities for the Dashers and more option or the customers

The DoorDash team is continuously striving to make their app more user friendly thereby smoothing the entire online food ordering experience. For this, they are implementing new features and making the performance of the app much faster.

By combining the best food delivery service with the mobile app technology, the future of Doordash is promising.

For food delivery startups, adapting the business model of DoorDash can help them take their business to the next level. One factor that the food delivery business likeDoorDash should always hold onto is the customer service. And here it is one main reason for the growth of the DoorDash.

Planning to build an app like DoorDash/ Check this out, On-Demand Food Delivery App Development company.

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