There are various food delivery services that rely on digital channels to connect hungry diners with local restaurants. But in the cutthroat competition for this market that arose during the COVID-19 pandemic, DoorDash stood out from the rest, accounting for about half of the expanded market. The explanation for this dominance and success in an unprecedented time may be its long-standing commitment to analyzing market trends, such that it was well-positioned to appeal to a broader mass of consumers, regardless of the radical changes in the market environment.
Specifically, whereas competitors like GrubHub and Uber Eats mainly focused on consumers and suppliers in urban settings, DoorDash recognized the potential of the suburbs. GrubHub had an early competitive lead in cities, but beyond trying to avoid this head-on competition, DoorDash also recognized that the suburbs were home to vast, underserved consumer segments who were just as hungry as city dwellers.
Its analyses also highlighted some unique benefits of suburban consumers. They tend to place larger, more expensive orders, which means DoorDash’s percentage yield from each delivery is higher. Parking at suburban restaurants is much easier, and suburban homes also have driveways and single front doors that make the delivery easier and less prone to error. Small restaurants in suburban areas also are less likely to offer delivery services, whereas urban restaurants generally know to have a delivery person handy to run orders around the corner.
Because consumers in suburban areas likely expect to wait a little longer for their order to be driven from a relatively distant restaurant, DoorDash also decided to prioritize adding a broader array of restaurants to its roster, rather than focusing on those companies that provided the fastest output (as Uber Eats did).
Due to this foresight, DoorDash has seen remarkable growth. Monthly subscribers tripled. As noted, it now accounts for more than half of the food delivery service market. And as a result of its successes, DoorDash has decided to go public, with an initial public offering valued at more than $30 billion.
Many of these successes appear closely related to current events though. Once restaurants open fully, and people’s coronavirus fears subside, will suburban families still order their food delivered, or will they head out to eat again? In the latter case, DoorDash risks losing many of its recent gains. It thus needs continued analyses, to predict what happens next.
- Perform a SWOT analysis for DoorDash, currently and for the future.
- What types of market analyses should it focus on conducting now, to maintain its competitive position?
Source: Laura Forman, “DoorDash Loves the ‘Burbs as Much as You Do,” The Wall Street Journal, November 17, 2020; Luis Santiago and Preetika Rana, “How DoorDash Pulled Ahead in the Food-Delivery War,” The Wall Street Journal, December 8, 2020