How DoorDash Operates Successfully Without Any Profit

Dedicated delivery apps are becoming an increasingly popular way to order food online. DoorDash is among the top players in this market, delivering a variety of dishes from nearby restaurants to hungry customers. 

If you have used DoorDash before, you may have been impressed with the app’s easy-to-use layout and (relatively) low prices. This naturally makes one wonder about the service’s operations – just how is DoorDash able to continuously stay on top of the market?

To answer this, let’s try and break down each moving part of DoorDash, starting with the most basic question of all.

What is DoorDash?

DoorDash works as the middleman between restaurants and customers, providing a food delivery service that works on-demand. 

Restaurants supply DoorDash with their menu and prices which the service then displays to hundreds of customers through their app. Users can place orders for meals online which are then delivered to their home by dedicated delivery personnel, or dashers

Payment can be made through either cash on delivery or online transfer with several micro-finance solutions, and the whole exchange takes place on the DoorDash app securely.

How does DoorDash work?

You can use the DoorDash app to satisfy food cravings instantly | Unsplash

The DoorDash model operates with the help of three different subgroups: customers, restaurants, and dashers. Each performs their role independently, with DoorDash acting as nothing more than a bridge providing logistics between them.

You can think of the way these groups interact as a cycle:

  1. An order is placed by a customer on the app
  2. The restaurant is notified to start preparing the meal
  3. Once the meal is ready, it is given to an available dasher
  4. The dasher delivers the order to the customer who placed it

How can I use Doordash?

Let’s see how each individual subgroup can use and take advantage of DoorDash to its fullest.

As a customer

Anyone can use the DoorDash app to order their choice of meal without hassle. You can follow the steps below to place your first order on the app and become a regular customer of the service.

  1. Download the DoorDash app from the Apple App Store or Google Play Store. Make sure to download the one labeled “food delivery” and not dasher, as the latter is for those wishing to work for DoorDash as delivery men.
  2. Log in to the app. You can use your email, Google account, Facebook profile, or Apple account to proceed. You can also use the app as a Guest, though you will have to create an account before checking out.
  3. Once you’ve logged in, you can start browsing through the available restaurants to place your desired order. DoorDash creates custom categories based on cuisine, price, and popularity to make it easy for you to decide what you want to eat. A Search option is also present on the bottom of the screen if there is a specific place you wish to order from. 
  4. Once you’ve decided on a restaurant, you can browse through the different dishes they are offering. Tapping on a specific eatery like McDonald’s will reveal its menu and prices, allowing you to add and remove food items from your order. This will all be stored in your virtual cart.
  5. Once your order has been finalized, you can place it by tapping on Checkout. DoorDash will tell you the estimated time of arrival for your food while also providing live updates on its whereabouts. 

As a merchant

If you’re a restaurant or convenience store owner looking to increase visibility of your establishment, the DoorDash app may be able to help. Following are the required steps to secure a place on the app’s list of partnered eateries.

  1. Visit the DoorDash website for merchants.
  2. Fill out a Partner Application requesting to have your restaurant collaborate with DoorDash. Details like your business name, address, business type, and general contact details will be required.
  3. Choose your preferred plan. DoorDash offers three plans to choose from, namely Basic, Plus, and Premier. Each offers a different rate for delivery commission in exchange for services like larger delivery areas and access to DashPass customers.
  4. Choose to avail extra services. Products like Storefront and On-demand Delivery provide services for restaurants outside of the DoorDash app, helping to increase the benefit you gain from partnering with DoorDash.

As a dasher

DoorDash dasher on a delivery run | BusinessInsider

A dasher is someone who works to deliver orders placed through the DoorDash food delivery app. Anyone can sign up to be a dasher, with payment being based on the number of orders delivered successfully across the total distance. To start earning in your free time as a DoorDash dasher, you can follow the steps below:

  1. Sign up on the company’s website. You’ll be asked to provide basic details like your zip code, name, email, and phone number, as well as more sensitive information like your Social Security number, birthday, and the type of vehicle you drive. 
  2. The DoorDash team will verify your identity and credibility as a potential dasher. If everything checks out, your application will be approved and you can start taking orders for delivery.
  3. To begin working, you will need to download the DoorDash app from the Apple App Store or Google Play Store. Make sure to download the one labeled “dasher” and not food delivery, as the latter is for those wishing to order food from restaurants listed on DoorDash.
  4. Login to the app using the credentials you used to sign up. You’ll see a display of available orders that require delivery.
  5. Choose an order to pick up and subsequently deliver.
  6. Arrive at the restaurant’s location before the specified pickup time, confirming your presence within the DoorDash app.
  7. Go through the items in the order, ticking each individually within the app to indicate the order is complete.
  8. Drive to the address specified by the customer that has placed the order and deliver their food to them.
  9. If the customer pays in cash, keep the amount with you. The same will be deducted from your earnings when you get paid for that week.
Incoming order on DoorDasher for Dashers | DoorDash

How Does DoorDash make money?

One of the unique characteristics of DoorDash is that its delivery fees are low, oftentimes being none at all. The prices of food listed by restaurants on the app are also identical to what the cost may be in-store, and free signup means that customers are not paying a cent more to use the app for their food delivery. All of this may force a bystander to believe that DoorDash is operating without taking any profit at all.

There are a few ways DoorDash is able to keep their business up and running year-round.

Commissions

Restaurants and convenience stores who receive orders generated through DoorDash are required to give away 15-30% of their earnings as commission to the service. This amount depends on the pricing plan currently being used by the merchant and is a flat rate on every order. For pickups, the commission rate charged is 6% on every order.

Delivery and Service Fees

DoorDash charges a nominal delivery fee as well as an occasional service fee on each order made through the app. Dashers that made the delivery are paid a base pay (usually around $6) which is extracted from this amount. Whatever is left afterwards goes to DoorDash, becoming a portion of their overall earnings.

Subscription Services

There are a few subscription services DoorDash offers its customers:

DashPass provides customers with in-app benefits like zero delivery and service fee for all orders over $12. To avail this, customers must pay a flat monthly fee of $9.99. This is ideal for those who regularly order food as it can help them save a lot of money in the long-run.

(DoorDash) Drive is another service offered by DoorDash particularly for businesses who require access to more delivery personnel. This can be utilized by restaurants who may not be able to keep up with a heavy influx of orders with their own delivery team but do not want to miss out on taking an order.

Advertising

Recently, DoorDash launched new advertising solutions for its merchants which allowed them to place ads and banners throughout the app to boost visibility. These Sponsored Listings can be shown to a custom audience with a fixed amount being charged every time a customer places an order through the listing.

Example of DoorDash Sponsored Listing | DoorDash

Final Thoughts

At its core, DoorDash is a logistics company with a keen eye for providing value to its clients. Whether you are a potential customer, merchant, or interested in a quick buck, you can stand to benefit from DoorDash in one way or another. Perhaps this is what makes the business as successful as it is, with new solutions being developed as the need arises. 

ABOUT THE AUTHOR

Kamil Anwar


Kamil is a certified MCITP, CCNA (W), CCNA (S) and a former British Computer Society Member with over 9 years of experience Configuring, Deploying and Managing Switches, Firewalls and Domain Controllers also an old-school still active on FreeNode.
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