How does Doordash work? Many of you wonder how a logistics company became one of the top online food delivery company. So, let’s start from the beginning how a group of 3 people turned a problem into a big business opportunity.
Every business begins with one simple mission, one simple problem to solve. Problems are the opportunities for an entrepreneur to create something exciting to solve the problem.
Doordash also began with one such simple mission: to make every merchant deliver goods in Palo Alto.
In the article we try to dig deep inside how doordash started, how do doordash work & its business model. let’s get started.
What is Doordash?
Doordash is a logistics company based in San Francisco which provides online food delivery services to its customers. It was started by three Sandford University students Andy Fang, Stanley Tang and Tony Xu in 2013.
Doordash is one of several technology companies in the world which uses logistics services to offer online food delivery from restaurants.
Doordash founding story
It all started in 2012, when 3 of them were working on building technology for small business owners and getting feedback on the app built by them.
The idea of Doordash came to them when they were chatting with Chole one of the store manager of Palo Alto. They had built the app for a small business store but unfortunately, it could not solve her problem.
When they were about to leave, she showed them she deliver list and how difficult was for her to get product delivered all by herself. This was not only a Chole problem, but many small businesses also had a similar kind of problem in Palo Alto.
It was the moment of light striking their head. They also came from big cities where online food delivery was available. But in Palo Alto, no restaurants delivered the food online. They thought of doing something about it.
All three of them are coders, so they put their coding hats on and built an initial prototype within hours. The company Palo Alto Delivery service was born on 12 January 2013.
Early Days of Doordash
Within half hour launching their prototype, they got their first order. Next thing they knew, they were delivering food every single day all over Stanford campus.
Andy Fang, Stanley Tang, and Tony Xu were students by the day and delivery drivers by night. In fact, they learned so much by doing the delivery work, they made it compulsory for anyone who wants to join doordash team to work as delivery drivers for one week.
They changed the name of the company from Palo Alto delivery to Doordash in July 2013. Since then, their main goal and focus have been to provide the best delivery experiences. They managed to do it by hiring drivers, working with restaurants, delighting customers to building out our complex, dispatch system.
Every business start with solving a problem they once faced. Doordash also was doing the same with getting food delivered. When they started to work as a delivery company, they realized that delivery was not only their problem but it was the problem of town as a whole. So, they set out to build a logistics company which work as an on-demand FedEx.
How does Doordash Work?
Most of the logistics companies work the same way. It is the subtle difference between any that makes the company stand out. Doordash is primarily a logistics company which also delivers the food online.
Doordash food delivery system is dependent on three major components: customers, drivers, and restaurants. The working model for customers, drivers and restaurants are completely different from each other. We in this article try to find out how does Doordash work for its key aspects. Let’s dive deep into it
How does Doordash work for Customers?
Doordash online food delivery works on 4 step modules for its customers. If you are an entrepreneur willing to start a similar business or trying to order food from Doordash, then these 4 steps are must for you:
Select the food you want to order:
The first thing you need to do get food delivered is to order the food. You can order food from the Doordash app. Users can choose what they want to eat and from where they want to eat.
Doordash app has various features such as search nearby restaurants, search food, Categories based selection, restaurants-based order and also help the users for better sorting.
After ordering the food, you have to make payment for the order placed. Once the payment is done and order is confirmed, Doordash forwards the order to the respective restaurants where the food is prepared and packed for delivery.
The delivery person picks up the packed food order from the respective restaurants and heads towards customers location. Doordash inbuilt software used by their drivers allows them to accept order whenever they have downtime. Users can track their food order to have an estimation of delivery time from the Doordash app.
Doordash delivery drivers known as the “dasher” try to make the delivery period short as much as possible. Users can give tips to the dashers if they wanted to do so. Dashers can keep 100 % tips they receive from users.
How does Doordash work for drivers?
Doordash drivers are known as dashers. You have to follow four simple steps to be a dasher:
- Get activated. First, you have to give your personal information to the Doordash. Doordash will do the background check on you and if you fulfill all the criteria, then you can sign up as dasher.
- The next step is to get ready. Doordash will provide you bag to keep food warm or cold, t-shirts and some other equipment. You don’t have to wear a t-shirt while delivering but be formal as it helps you to get a good rating.
- Install the app for dashers. The app is available in both iOS and Android. Read terms and condition and click agree if you want to continue.
- Turn on the app, look for delivery, accept order and start bringing home money.
How does Doordash work for Restaurants?
If you are running a restaurant, you always look for ways to get more customers. The market has seen a sudden growth of online food delivery services in the past few years. You can also list our restaurants in online food delivery services such as Doordash to attract more customer.
Doordash allows your restaurants to improve customer experiences by offering convenient ways for people to get food delivered in their home. You have to sign up as a partner of Doordash, to get food order from Doordash.
There are 3 simple steps to be partner restaurants of Doordash:
- Sign up with Doordash as a partner. You will get access to the Doordash Merchant Portal through which you can use to manage orders and track customer data. After you set up and agree with terms and condition, you can start taking orders through Doordash.
- Restaurants get the notice of food orders from customers in whatever format works best for them (email, fax, or the order manager app).
- Payment is received in weekly basis after deducting the fees.
Doordash Business Model
The company Doordash operates in the aggregator business model, it partners with restaurants and drivers to deliver food online. It is a hotel aggregator, it collects information about restaurants and drivers and make them partners, and sell the services under its own brands.
Key Partners in Doordash Business Model
Doordash business model consists of 2 key partners. They are:
The restaurants can partner with Doordash in order to get more customers. Restaurants get online food order from Doordash and they have to pay commission to Doordash.
Not only we get new customers but you can also improve customer experiences through Doordash.
Doordash drivers are known as dashers. You can also sign up as a dasher and earn money. All you have to do is fulfill certain criteria set by Doordash and you are ready to go.
Key Activities of Doordash Business Model
The major activities of Doordash business model are:
- Take online order for food
- Hire delivery personnel and manage their payment
- Manage logistics in order to process the order from customers
- Create, maintain and manage the technological infrastructure
Key Resources of Doordash Business Model
You need resources to run the organization. Without the presence of required resources, you cannot achieve your goal. The resources you need when you have online food delivery such as Doordash are:
Doordash founders are coders, so they had no problem building technological platform. Online business totally depends on how your platform performs. It must be easy to use, must contain various features and payment system.
Restaurants partner with Doordash and get their food delivered online.
Doordash hires delivery persons known as dashers, they are the most important resources for Doordash.
You must provide something of value to succeed as a business. Every business has some value they can offer via their product or service. Doordash offers value to customers, restaurants partners and delivery personnel.
Value provided to customers
- Order food online
- 24/7 customer service
- Browse the menus of various restaurants and order from your favorite restaurants
- Customer can track their order. They have an estimation of delivery time from tracking order.
- Efficient services and better pricing
Value provided to Restaurants Partners
- Extend the customer base of restaurants
- Get restaurants listed on the online site to serve their customers
- Easy, cheap and fast way of getting food delivery orders
Value Provided to Delivery Personnel
- An easy way of earning part-time/full-time money
- Flexible work hours. You can choose the hours you want to work
- Delivery personnel can keep 100 % of tips, they receive from customers
Channels of Doordash Business Model
Website and mobile apps for both iOS and Android are the channels of Doordash Business model.
Doordash maintains a good relationship with its customers. Customer can make a query, ask for help through the 24/7 customer support of Doordash. Service agents are always available to answer and help the customer.
Doordash also maintains a good presence on social media. Customers can also get the help needed via a social media platform.
Doordash customer segments involve people who look for online food delivery and restaurants who partner with Doordash.
The main customers of Doordash are the users of the app. People who don’t want to cook, who want to eat outside and those who want their food to be delivered at their location are the customers of Doordash.
Restaurants are also the customer of Doordash. The restaurants which do not have delivery guys, which don’t have their website and those restaurants who want to use Doordash platform & customer base also comes under the customer segment of Doordash.
Revenue Model- How Doordash earns Money?
Entrepreneur who want to start on-demand food and logistics company may have reservation about how to generate revenue. Well you can take a look inside how doordash is earning money.
Doordash revenue model is simple. The main source of Doordash revenue comes from commission. Let’s know about revenue sources in details
Commission from restaurants:
Doordash delivers food to customers. It partners with restaurants around the city and enables customers to order the food from Doordash app. The restaurants have to pay a 20 % commission for every food order which they receive from Doordash. Rate of commission is different for different restaurants but they all have to pay a minimum of 20 % commission on every food order.
Doordash hires delivery personnel rather than working with a delivery company in the contract. It charges a certain amount of money for delivery of food. The delivery fees differ according to the distance. On average, the delivery fee of Doordash is $5 to $8. Furthermore, the money received from delivery is also the major source of revenue for the company.
Restaurants can market and advertise themselves on the Doordash app. Doordash charges a certain amount of money for advertisement. Restaurants can be seen on the list of featured restaurants, appear on the top of the search list by paying commission to the Doordash. Doordash makes a good amount of money by advertising on its app.
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