Doordash Business Model & Pricing Model

The most popular food delivery application that has surpassed the sales of veteran players GrubHub and Ubereats is DoorDash. The application’s popularity is under every entrepreneur’s radar. They are more curious than ever before to find out the details of “how does DoorDash work” and the “DoorDash business model,” which is the secret behind its success. And therefore, we have planned this blog. We hope to satisfy every curiosity revolving around the DoorDash app and plan to acknowledge entrepreneurs with our knowledge so that they can easily make an app like DoorDash.

“Restaurants and more, delivered to your door”: DoorDash

These words have won hearts. DoorDash is a leading food delivery application in the US. As per the 2020 data, it was responsible for almost 45% of all food delivery orders. DoorDash has partnered with local restaurants (nearly 300,000) to deliver food at customer’s convenience in the US, Canada, and Australia. Ever since its incubation, the application has traveled a long journey (yet short) to achieve this level of success.

DoorDash is a prominent player that has successfully sustained its business even during the pandemic. There is a lot to be explored and learn from the way how DoorDash works and then implement the learnings in your future food delivery app development.

What is DoorDash?


DoorDash has evolved through all its years. It has adopted new ways to meet the challenges and satisfy customer’s demands in every single way. The app idea was founded in 2013 by the name Palo Alto Delivery.

Four Stanford students named Tony Xu, Stanley Tang, Andy Fang, and Evan Moore brainstormed the idea of using technology to solve real-life delivery problems.

The enthusiasts put the idea into action, and a delivery system named Palto Alto Delivery was introduced for the first time in the Bay area. Within the first year of its inception, the idea grabbed almost 70 restaurants in the Bay Area and collected almost $2.4 million in fundings. The name was soon changed to DoorDash, and from here, its journey began to grow (20% rate every week).

SoftBank, SVAngel, Sequoia Capital, and a few other popular names showed interest in the DoorDash expansion and contributed their share of investment.

Well, the journey didn’t go as smoothly as it sounds. The application idea encountered many legal conflicts, including the merger with Uber. The two giants couldn’t come to common terms, and that led to an unsuccessful attempt.

how does doordash work

Interesting facts to know about DoorDash:


- Every DoorDash employee has to spend one day as a “Dasher” and deliver food.

- DoorDash aims at using AI technology to build a perfect food delivery system and thereby mitigate delivery errors.

- DoorDash also tried hands-on Alcohol delivery services in 2016 by partnering with Anheuser-Busch.

- DoorDash operates in around 4,000 cities and has 340,000 stores in America and Canada (as per 2019 data).

- DoorDash has acquired more than $2.4 billion in funding.

- The net income of DoorDash is $450 million (as per Dec’19)

- The New York Stock Exchange value of DoorDash is $72 billion in 2021.

- DoorDash has 18 million users, majorly from the US.

I bet you would have already felt inspired and must be determined to have a fantastic food delivery business model. Now, let’s find out how does DoorDash works and what is the DoorDash pricing model?

how does doordash work

How does DoorDash work?


DoorDash is a hyperlocal food delivery application operating across the US. DoorDash is a great application basically for three segments of the audience. First, the users, second, the restaurant & business owners, and third, the dashers, aka food delivery executive.

Users use the application to browse through the list of restaurants and reach out to their favorite restaurants. Users who frequently use the food delivery application like DoorDash include the ones who are running errands and don’t have time for preparing food, or who prefer to have their food delivered at home, or people who do not have enough space in the house to be designated as kitchen or the ones who love tasty food of restaurants.

Restaurants have benefitted the most from such a food delivery business model. Restaurants who do not have an existing food delivery system, or the ones who can’t afford to hire dashers, or the ones who simply want to increase sales, majorly use the DoorDash application.

Delivery executives, aka, Dashers in DoorDash, usually work flexible hours. People who are looking out for a part-time job, or even who want to join a full-time delivery service, or the ones eager to grab additional incentives, join the DoorDash team as food delivery executives.

It’s all here. All in one app: DoorDash


The working flow of the DoorDash app looks like this:

- Users log into the application and go through the list of popular restaurants in their area and nearby. The app also suggests popular names of restaurants.

- After going through the extensive list of restaurants & menus, users place an order with the restaurant.

- Users can also schedule their order and have it delivered at the defined time.

- Users can track the order in real-time after paying for the same to the restaurant.

- Once the payment is placed, the order is processed by the restaurant.

- Every single update is sent to the user so that they can keep track of the same.

- When the order is prepared by the restaurant and packed, the delivery person picks it up and starts his/her way to the user’s destination.

- The GPS facility helps the dasher to reach the location. If the user is happy, the user can rate the food and share the experience. If not, the same can be shared over the application.

Read more on: How does Grubhub work?

Coming to another important aspect,

What is the DoorDash pricing model?


Every on-demand application has its own ways of making money. However, the DoorDash pricing model is well-articulated and worth knowing to make an app like DoorDash.

Delivery charges:

The DoorDash team manages the orders and the delivery entirely. Therefore, the DoorDash team charges a delivery fee of $5 to $8 from the customers. However, this may vary depending on the order subtotal, and it is compensation for various costs, including marketing, delivery, payment processing, etc.

Commission from restaurants:

DoorDash application receives commission charges from the registered businesses. It takes 20% of the order from the businesses providing services using the DoorDash application.

This commission is for managing the delivery module of the food and ensuring safe delivery on time.

Advertising services:

Another great way of making money adopted by the DoorDash team is through advertisement. It allows restaurants to market their services on their platform; in return, the team takes advertising fees.

DashPass:

The subscription model of DoorDash is known as DashPass. Users can opt to go for the DashPass model and save on delivery fees. A user pays $9.99/month in this business model and gets an exemption of $4-5 of the delivery fee.

Additionally, if the order value exceeds $12, DashPass users are not even required to pay the delivery fee at all.

What other things contribute to the pricing strategy of DoorDash?


- DoorDash order prices are inclusive of taxes.

- The user is free to pay a service tip to the dasher.

- For orders smaller than $10, a fee of $2 is charged.

- The distance between the customer’s location and the restaurant also influences the delivery cost.

- Food order prices may differ from one restaurant to another.

- During high demand, the service charges may vary. The service charges are left on the restaurant owners to decide.

All-in-all, DoorDash has some amazing methods of earning money while providing quality service to its users.

What is the cost to develop an app like DoorDash?


How much does DoorDash app development cost is the most common question in every entrepreneur’s mind? Well, if you are trying to build an app from scratch and initiating the mobile app development process with the Lean Canvas model, project requirements collection, Quality testing, etc., it would cost you around $15,000.

If you plan to integrate advanced features such as route integration, delivery tracking, or other third-party integrations, the price will vary, and so will be the time of development. The more complex the app design is, the higher is the amount of time spent by developers building it.

If you choose to hire mobile app developers for developing a food delivery service, you should consider their hourly rates and multiply it by the total number of hours required.

Kody Technolab is skilled in developing online food delivery apps and other on-demand apps in various niches. We follow transparent app development procedures and keep our clients updated with every progress.You may also contact us to discuss any further details.

Closing Thoughts!


Mobile app development is a vast field. You need to maneuver over every aspect before taking the final decision of developing an application. I hope the given information on DoorDash and its business model serves your cravings and helps you make the best of the best food delivery app. Put your best foot forward in the industry by developing an app like DoorDash.


ABOUT THE AUTHOR
blog author - kodytechnolab

Shreya Oza

Content Strategist


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