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How Does DoorDash Make Money?

How Does DoorDash Make Money

In this technology-driven world, making money through an application is one of the easiest ways to make quick money and still tricky. Knowing all the steps is one thing and following it is another. If you’re planning to develop your own food delivery application and looking for a guide and strategies to make money from it, there is no better example than DoorDash to learn. 

DoorDash was set up 8 years ago in California by 4 college students for delivering food to only their fellow students. Delivering food in more than 5,000 cities has come a long way.  This article will give you an insight into the basics of DoorDash, its working, its revenue strategies, future perspectives and will also give you an idea of which steps and features you can borrow from DoorDash to make money.

Table of Content
1. What is DoorDash?
1.1 Unique Features of DoorDash
2. How Does DoorDash Work?
3. How Does DoorDash Make Money?
4. What Ideas Can You Borrow as a Start-Up?
5. Wrapping Up

What is DoorDash?

DoorDash is an online food ordering and delivery multiple-platform application, available on iOS, Android, and the web. Now it is headquartered in San Fransico and currently is the largest food delivery app in the USA beating the likes of Uber Eats and GrubHub. This one started as a basic idea while providing assistance to a macaroon store owner and then it took space and started providing online food delivery to students of Standford University. After being developed and in-market for 6 months, DoorDash gained much-needed publicity and investment. And in 2018, DoorDash hit it big and became the most used food delivery app in the USA. DoorDash not only provides services in the USA but also in Canada, Australia and recently expanded its venture in Japan. DoorDash also provides tons of options to choose from for customers, be it on the basis of your area or locality or kind of food you want or type of cuisine even it gives its customers options to order gluten-free meals from selective restaurants. 

Unique Features of DoorDash 

DoorDash was founded in the year 2013, January by Tony Xu, Stanley Tang, Andy Fang, and Evan Moore. It has come a long way from being only an online food delivery platform. DoorDash has not only expanded over North America, Australia, and Japan but also has added many features for all the three people involved, that is the customers, the merchants (restaurant partners), and Dashers (their delivery executives).

A few of the many features are –

For Customers 

  • In-app search engine – that not only allows the customers to search the dishes or the restaurants but all the options available in their locality, as per cuisine, etc.
  • Liquor shop options 
  • Convenience & Grocery stores the customers can get the snacks, drinks, groceries & pet essentials delivered in under an hour. 
  • Pick-up option – Option that the customer can place the order using the app and pick up the package on the way. 
  • Group-ordering – Customers can place a group order for their family or co-workers  
  • Gifting – DoorDash and Caviar last holiday season added this new feature where their customers can order sweet treats to savory meals ranging from holiday baked goods and chocolates to celebratory cake and champagne, to get-well food and convenience items like chicken noodle soup, cough drops, and bath bombs. 
  • Pet Essentials On-Demand – DoorDash has also recently added a new feature for delivering pet essentials on-demand in the USA. 
  •  Group-ordering from iMessage – this new feature is for DoorDash customers who use iOS phones. Using this feature customers can place group orders directly from the new iMessage app without login into DoorDash. 
  • Flower shopping – allow the customers to order flowers.

For Merchants 

  • Partnership – a complete partnership that allows the merchants to have the platform and delivery services both. 
  • DashMart – let merchants offer retail products to customers through DashMart. DashMart, DoorDash’s new convenience store platform, offers merchants an opportunity to take their convenience store online and reach a wider audience. 
  • Storefront – a complete, commission-free online ordering solution for merchants. It lets the end-users order directly through the merchant’s website that is provided by DoorDash. Storefront allows businesses to have their own customized websites with their own logo, branding, and colour scheme.  This incorporates DoorDash ordering, delivery, and pickup logistics into the merchant’s own websites. 
  • Self-Delivery – this gives the merchants only the platform to list their business and attract customers but  DoorDash doesn’t provide the Dashers to deliver the food. 
  • DoorDash Drive – this feature lets the merchants use their own website or app for ordering and DoorDash only provides delivery services. The end-users use the restaurant’s website to order and the Dasher will deliver the food on the behalf of the merchant. 
  • DoorDash Drive Large Order Deliveries – this is a special feature that allows the merchants to get their large orders to deliver that involve special handling by expert Dashers that have qualified for Doordash Drive and the merchants can have their pick among the dashers. These deliveries usually include catering orders, large group orders placed directly with the store, or large group orders for corporate clients. Some of these may also involve a light setup once arriving at the customer’s location if the restaurant or client wants Dashers to also provide the setup services for the merchants. 
  • Merchant Portal – this one lets the merchants track their business performance, insights about the business that needs immediate actions, and allows them to make adjustments and modifications directly on the portal. 
  • Marketing strategies – this feature by DoorDash lets the merchants learn and execute better marketing strategies. 
  • Promotions – this one is promoting the business and to gain customers without any hassle-bustle. 

For Dashers 

  • Flexible working hours – the dasher can work as per his will, accept as many orders or none according to his own wish or choose the timing, the serving area, etc. 
  • Base salary – Dashers get a base salary that is fixed per delivery. 
  • Additional tips – DoorDash won’t keep the tip money, it directly goes to the dasher’s pocket. 
  • Challenges – this one is a fun feature for dashers to earn extra cash by taking up a challenge and completing it. At the end of the completion, the dashers get rewards and extra cash. 

How Does DoorDash Work?

There are at least a dozen food delivery services almost working on the principle with the same techniques. So, here the question arises is DoorDash works in a similar way as the others? As per the reports, in the year 2019 alone DoorDash’s revenue was 13.2 million USD and by the end of the year 2020 the customer strength increased by 75%. The number speaks for itself if DoorDash works like other food delivery services it won’t be able to get to the heights. So, definitely, it won’t follow the same working techniques. The basic principles might be the same but not the working. If DoorDash won’t work like others then how does it work? 

The front-end working of the app for the end-user is slightly similar to the other food delivery apps like sign-up, select the item, add to cart, and order.

DoorDash Make Money

DoorDash Make Money

DoorDash Make Money

DoorDash Make Money

DoorDash Make Money

The actual working process of DoorDash goes like this – a customer places an order at one of the desired restaurants agreed with the tips and charges. The restaurant receives the order with all the instructions and starts preparing the meal meanwhile DoorDash alters the nearby Dashers. One of the Dasher accepts the order request, goes to the merchant to pay for the meal using the Red Card, picks up the order, and delivers it. DoorDash has recently shifted to Kotlin and supports multiple platforms. DoorDash has 3 different dashboards – 

  • Users/Customers
  • Dashers 
  • Merchants 

To connect these dashboards, maps and other services DoorDash uses its own APIs and a few third-party APIs. DoorDash has also developed its analytical tools.   

How Does DoorDash Make Money? 

As a user or mobile app developer, you must be wondering how DoorDash makes money? Because they charge minimal delivery charges that too usually go to the Dashers. 

DoorDash makes money mostly through the commission that it earns from its merchant partners and also a small amount from third-party app partnerships. DoorDash provides a number of services and options to merchants to choose from and hence charges them also. Usually, the partnered merchants/restaurants pay annually or monthly commission to DoorDash. But some merchants prefer to pay as per the orders they receive from the platform. DoorDash also provides other kinds of delivery services like delivering bulk orders and afterward setting up the tables or allowing the merchants to select their own favorite and trustworthy Dasher for delivery. This also helps DoorDash to gain popularity and hence the revenue. DoorDash provides a number of other services to the merchants in addition to the platform to sell their food and delivery services and charges handsomely for that as well. It provides marketing programs, in-app better search ranking which is also chargeable. 

DoorDash provides 3 different memberships to its merchants.  

  • Basic – for this the merchants have to pay the lowest with 25% commission of whatever they earn through the platform. 
  • Plus – the plus membership can be obtained after purchasing the DashPass. The benefit of this membership is it helps the merchants to reach a wider audience with the same 25% commission to DoorDash. 
  • Premier – merchants can be a premier partner of DoorDash by p[urchasing the DashPass and promising a 30% commission. The benefits for the merchants will be covering the biggest area possible and maximize sales. 

DoorDash also provides paid promotion schemes and features for the merchants to rank on top with better visibility to their customers with promotion blogs that DoorDash posts on their site with clickable links. It also generates handsome revenue by catering business performance management tools and analytical tools. DoorDash also supplies self-developed software paid tools to their merchants for finding new customers, increasing their bottom line, and outshine their competition. DoorDash also has paid in-app advertisements for its merchants. To generate extra revenue DoorDash has also indulged in paid customized financial advice tools for its partnered merchants. 

DoorDash makes a little money by giving the kitchen spaces to restaurants that only prepare food that is ordered through the DoorDash app, commonly known as Cloud or Ghost kitchen. DoorDash also makes money through its own developed software that helps partnered restaurants with easy cash registering and management. As the pandemic makes the situation worse for diners and restaurants more and more businesses are shifting online to gain their footing again in the market, having their own website definitely helps but not so much. Hence, being on the already popular online food delivery app which provides tons of features makes more sense. This definitely brings more revenue to DoorDash and also helps the merchants. 

A small portion of the revenue also comes from the customers on the basis of their order from which location they are ordering and at which time they are ordering. These are not delivery charges but other in-app charges. DoorDash also provides premier membership on an annual and monthly basis to its end-users with a number of benefits and charges a little for that as well. 

No matter how much DoorDash makes money through the merchants or customers, a great part of its revenue comes from the funding by big ventures like Y Combinator, Charles River Ventures, Khosla Ventures, SoftBank Group among others. 

What Ideas Can You Borrow as a Start-Up? 

If you’re a mobile app developer and thinking of developing your own food delivering app, no time is better than now. The ideas you can borrow are – 

  • Can start with a smaller area like DoorDash started. 
  • If you can’t provide delivery services you can provide only the platform services to the restaurants and diners and let them deliver the food themselves. 
  • Can provide paid memberships with extra features 
  • Convenience store platform 
  • Bulk delivering if you can arrange good delivery executives 
  • Third-party apps promotion and can collect revenue from it. 
  • In-app advertisements 
  • In-app promotions of the restaurants and rating 
  • Table bookings at partnered restaurants and diners through your app 
  • Surprise-food gift deliveries feature 
  • Customized analytical tool for your partnered restaurants

These are a few ideas you can consider to add to your food delivery mobile app. Hand if you’re already ready with your app and waiting to launch you can also refer to our previous blog How to Launch an App?.

Wrapping Up 

In this article, our main focus was giving you a clear idea about how DoorDash makes money and what ideas you can borrow for your start-up venture. In case we miss any point or you have any suggestions let us know by dropping a comment.

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