How Door Dash Captured 55% Food Delivery Market Share and Won Their Category

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Growth Story is a weekly podcast that breaks down the strategy and tactics utilized by high growth companies, in a short case study format hosted by Scott D. Clary (@scottdclary)

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Welcome to success story, the mostuseful podcast in the world, I'm your host Scott de Clary, this accessorypodcast is part of the hub spot podcast network, the upsot podcast Newark isthe audio destination for business professionals, who see the besteducation and inspiration on how to grow a business. The spot podcastnetwork coasts act as on demand, mentors entrepreneurs startups andscale up through practical tips and inspirational stories, listen, learnand grow with the hop spot. PODCAST network at House spot com s podcastnetwork. Today, I'm going to break down the story of door dash the origin storyof the founders, how they raised money, how they grew, how they took theirproduct to market all the different iterations, the ups and the downs. Thisis going to be a case study that is going to show you how door dashcaptured over fifty five percent of food delivery industry category marketshare. They beat out GRUB hub post mates, Uber Eat. They are the incumbent.They are the one to be I'm going to walk you through how they did it. Thisis a case study. This is door dashes...

...business growth story, UBARI GRUB HUB, post mates, door dash.These companies have been locked in a heated competition for years now theyhave been vying for dominance in the food delivery war. However, door dashovertook his co competitors with a fifty five percent market share inMarch of two thousand and twenty one, and they are accountable for fifty sixpercent of all food deliveries in the USA door dash is evolved from a smallstudent found. It start up to the most successful online food deliveryplatform in America in just seven years. It is even broken into Australia,Canada and Japanese markets. It's pretty impressive for a company, it'snot only a decade old and it was student founded. These are not seniortech founders. Let's talk about the students, so two thousand and twelvestanford students, Tony Zoo Stanley, Kang Andy, Fang and Evan Moore, beganworking on a small APP for small,...

...rather not a small lot for small, but alarge at for small business owners. They weren't sure what they wanted tobuild, only that they wanted it to be used by small businesses, so theyinterviewed hundreds of business owners in the area asking what theirbusinesses were like and if there was anything in particular that they needto help with they tried setting up ipads at the retail point of sale tothe customers could answer a short marketing attribution survey. Butunfortunately, while some customers are willing to answer the survey, it wasn'tproducer to the business, it didn't provide enough value and it wasrelatively difficult to scale expensive to install and maintain what not. Sothey also got an idea for food delivery after interviewing a macarone storeowner, but they overheard her turning down a delivery order. They wereinterviewing her about the POS device, the point of sale device, but theyheard her turning down the delivery order. Then they realized that fooddelivery was an issue for restaurants. There was no scalable solution todeliver food, so it got to the point...

...where restaurant owners actually turneddown orders versus taking the order making some money shipping out to thecustomer. Only larger organizations, larger restaurants were well equippedto do this, so economy's a scale right. So after asking around again, theyfound that very few restaurants deliver due to inconsistent orders. Smallbusinesses can't afford to have their own fleet of delivery drivers when theymight receive some delivery orders one day, virtually none, the next and so onand so forth. So the four students found it Palo Alto delivery com, whichonly had a google voice number and menus IMPF format for a few localrestaurants. They charge a flat rate of six dollars, predeliberated no minimummortar size and the four of them personally handled the deliveries. Oncethe business took off, they started receiving more orders and they couldhandle so they began hiring people to help with deliveries hung flyers. Theyalso posted on Craig's list in two thousand and thirteen aftersuccessfully pitching door dash to investors at Y combinator, the companyreceived a hundred twenty thousand dollars in seat capital and officiallyrenamed the company from Palo Alto delivery to Dor Dash. It was in twothousand and thirteen that really...

...really kicked off their incrediblegrowth in two thousand and fifteen after spending two years in mycombinator door, dash was operating in eighteen different cities and receivedsixty million dollars in investment with the start of s first launch ofCanada, two thousand and sixteen Kolsaett res and Kleiner Perkinsinvested another a hundred and twenty seven million dollars into the company.Surprisingly, though, Dor Dash's valuation went down to seven hundredmillion. Despite the increase in investment, it was a very competitivemarket. However, they found a way to outgrow the competitive market, whichwas to buy competitors first acquisition in two thousand andseventeen door dash acquired rickshaw, a start up that focused on delivery andlogistics. At the time, Dortata working on its own platform door, DASH drivedby acquiring rickshaw door Dash, could integrate some aspects of Ri Rickshawsoftware with DOOR DASH drive. This acquisition strategy brought them tothe next level. It was in two thousand and eighteen after they had acquiredseveral companies like rickshaw, that soft bank invested five hundred andthirty five million dollars into door dash the food delivery service reachedUnicorn status, with this investment...

...with evaluation of one point, fourbillion dollars and after that they just continued to grow by the end oftosend eighteen door, dash manage to overtake Ubari as the second mostpopular food delivery service. In America, expansion continued in my wothousand and nineteen. The company open t door dash kitchen, a ghost kitchen inCalifornia, the ghost kitchen concept. Is they open kitchens, whererestaurants can just sell from a kitchen? They don't have to have abrick and mortar store front door dash also acquired caviar, a food deliveryAPP with listings from high and restaurants. It didn't deliver outsidethe APP and then, of course, like with all good start up stories. There is alittle bit of luck, so the delivery boom when Covin nineteen hits in twothousand and twenty the on demand food delivery. Industry blew up so shelterand place. Orders created huge reduction and foot traffic, meaningthat restaurants had to rely on services like door, Dash Blue Berets,post mates and GRUB hub if they wanted to make any sales at all the massivesurge on orders allowed market leader...

...door Dash Rakin one point: Nine twobillion dollars in revenue, but I, despite that, they still weren'tgenerating profits. Instead, the company was actually losing moneyconsidering how expensive it was to ship and basically run those shippingand logistics for all the Food in two thousand and twenty is when dor dashfinally went public with an IPO at a hundred and two dollars per share whenthey first went, live on trading day, but ended the first day of being publicwith the share price of a hundred eighty nine dollars and fifty one cents,despite its lack of profitability, investors seem to be interested in doordash. However, not every major institutional investor was on board.There was a lot of skepticism when the company is this size, but still notprofitable. However, some analysts believe that if Torda continues to groweven after the pandemic induced food delivery, business boom ends, it mightbe found profitable in the future. However, it is not yet the door dashstrategy, so what made door dash so...

...successful? We touched on a few points,but ultimately we have to figure out what made it stand out from itscompetitors, because again it's a crowded market, so they have theinvestment in door. Dash definitely played a part in its success, but othercompanies had money too. It's not just because of the money. So number one wassimplicity. First door dash really kept things. Basic Yeah is simple, intuitiveeasy to use. This is what captures customers, and this is what keepscustomers they made convenience to speed of priority and provided sellerswith a user friendly apt that lets them accept orders without ever speaking, toa customer. They also focused on the technology first platform. They usetechnology is a driving force, so door dash has been able to stay ahead ofcompetitors by being technology driven and looking for ways to expand into newmarkets and double down on the tech that work. So, for example, oneinnovative part of their business model was that customers could order foodfrom any restaurant in their service area which helped boost their marketshare immensely drink the Covin nineteen pandemic, and this also playedinto the emotional component of ordering from local supporting localrestaurants throughout Ovid, so the...

...company partner, with both large andsmall businesses, not just from the inner city, but also from the suburbs,additionally provided merchants with invaluable data. Like brand of consumerinsight, this kind of data is beneficial to smaller shops. They maynot have resources to gather it independently. It's early days, Dordwould also give discount codes or coupons to users who review it on theAPP store. This feedback led to improvements in the APP and, lastly,it's sort of always been focused on the future. The company, although isprimarily a food delivery service. The company is always looking to branch out.Try New things to test to iterate they're, never complacent, so the goalis to provide and on demand delivery service, not just for food, but forvirtually anything that needs delivering so final words on Door Dash,even at its best, the economy that all these on demand, delivery, industry andservices are based on can still be a little bit unstable. But the point isto maintain a position as a market leader, you will have to constantly bereinventing, be iterating, be trying...

...new things. That's what Dor Dash didwell throw its entire life cycle after they continue to do today, and that islikely why they will continue to grow in the future. All right, that's it fortoday, so I hope you enjoyed another case study. If you haven't already hitthat, like button hit, subscribe, leave a comment below and I'll see you againnext time. I.

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