DoorDash's nationwide and hyperlocal moves
Macro and micro expansions in the delivery space for the public company
Before we delve into the topic of DoorDash and its expansion into both nationwide shipping and on-demand grocery delivery spaces, I wanted to offer up some disclosures.
In full transparency, I partner with DoorDash on local restaurant delivery and with GoldBelly on nationwide shipping for Nom Wah. As such, I am privy to confidential and sensitive information.
However, nothing said by me in the below or in other public spaces contains any such information. Any and all remarks, including speculative ones, that I make are informed by what is publicly available.
So, with all that said and done, let’s get started, shall we?
Macro-expansion: nationwide delivery for DoorDash
DoorDash officially launched its nationwide shipping product (dubbed “Nationwide Shipping”) last month. Counter to Eater’s assertion that DoorDash’s move to nationwide would negatively affect local food delivery, I’d contest that it is a move that offers scale for the company and positioning in a space that hasn’t seen many challengers.
Up until now, Goldbelly had been the only player in providing restaurants a third-party platform for CPG and nationwide delivery. Otherwise, restaurant brands either stuck to local delivery or offered nationwide shipping on their own websites, pursuing the whole sales funnel of awareness to acquisition all on their lonesome. To become a contender in this space is difficult—the amount of logistics at play with regards to understanding shipping different types of perishables, handling losses with shipping companies, and walking small- and medium-sized businesses (SMBs) through new challenges is a behemoth.
Why it makes sense for DoorDash to enter the nationwide space
Considering the aforementioned challenges, it is clear why local third-party delivery platforms, such as DoorDash, would be primed to tackle this space head-on. After all, they’ve been working with SMBs for years at this point, and have the financial resources (even if it aids in hampering profitability) to hire teams to learn the ins and outs of shipping food.
More importantly, though, restaurants have had to come face-to-face with the stark realization that their business models had them putting all their eggs in one basket—which put many of them in financially precarious positions early on in the pandemic. In turn, DoorDash positions itself as the company who is already there, with whom many restaurants are already partnered, and offering proverbial baskets and eggs. And as such, it becomes a much easier hop, skip, and jump—vs. onboarding with another platform—to explore additional revenue streams and audiences.
Sure, we can discuss about how unfair third-party delivery platforms have been to independent restaurants, but put yourselves in the shoes of the business. Administering one’s own online perishable shop and managing all the backend logistics is a Sisyphean task, especially for an industry facing unprecedented labour shortages. If someone familiar is offering to help you jump through the hoops, why wouldn’t you at least consider it?
Not to mention, DoorDash’s (and other platforms’) customer databases are a huge boon for SMBs. Being able to tap into and be visible to millions of users is an advertising device that brick-and-mortar-forward business would not normally have at their disposal. It’s a tradeoff: having access also means that you will never own that customer data outright, but I’ve also pointed out the ways in which many SMBs are very much not prepared to house this information.
DoorDash is clearly covering latitudinal streams of revenue with this move to scale from only local delivery to actually shipping the local across the country. Whether or not this venture is a successful one, it is finally offering a direct competitor to GoldBelly, who has to stake its own claim in point of differentiation (which it has begun to do with the announcement of a media and personality extension).
And the micro-expansion: 15-minute delivery
Last week, DoorDash announced its "‘ultra-fast grocery’ deliveries in 10-15 minutes" service, DashMart. With one store in New York, the company plans to eventually scale the offerings to include additional locations. The DashMart concept is not new; DoorDash launched its first wave of stores last August. However, what motivates the company for its latest press release is that this NYC location is the first brick-and-mortar store, whereas the previous iterations were mystery fulfillment centres.
DoorDash’s move of making a bigger splash with fast grocery delivery is not surprising. After all, this past summer saw an influx of start-ups take over New York with ad nauseam digital out-of-home advertising (such as those LinkNYC kiosks) and promises of grocery delivery faster than your ability to put on pants and make the inconsequential trip to your local bodega or food mart. Given that DoorDash already has the infrastructure for local restaurant food delivery in place, horizontal expansion (and perhaps eventual integration) vis-à-vis grocery delivery is the next step in expanding their footprint across related services.
Let’s talk about the “DashCorps”
More interestingly, though, is the approach to workforce. DoorDash states that DashMart workers will be part of what the company calls the DashCorps, and will be considered full- and part-time workers—in other words, they will not be independent contractors (i.e. 1099 workers). The move is a copy of the 15-minute-or-less direct competitors who employ all their workers, from inventory control to grocery delivery. I wonder, though, if this move will be short-lived for all these businesses, particularly as it concerns the couriers.
When I was driving to dine out with a friend last weekend, I saw a Fridge No More backpack-wearing cyclist ride in the wrong direction down a residential street. The cyclist narrowly missed a nasty collision with a delivery bike that had the right of way. That incident allows for questions on liability and insurance to crop up in my mind.
While the current move on DoorDash’s part to expand into this space is an exercise in spreading its reach by way of leveraging its resources to fiercely compete against newcomers, I cannot foresee DoorDash maintaining the couriers as a part of the full- and part-time DashCorps over a long period of time. Either substantial changes to safety training and protocols would have to be made to mitigate risk, or this set of employees would be reverted to independent contractors so as to eliminate any risk whatsoever to the company. And seeds of this idea have already been planted, with DoorDash, in the more expansive blog post, reinforcing that it is, overall, very much pro-independent contractor work: “90% of Dashers nationwide say they want to remain independent contractors, and we’re steadfastly committed to protecting and strengthening this independent work.”
And then you have Instacart, who also announced that it will be jumping into the 15-minute-or-less game come February. However, unlike DoorDash or other direct competitors, Instacart makes no claims or plans to transition anyone out of the gig worker status—not even for a while.
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