DoorDash Success Story: Idea, Growth, & Business Model

Silicon Valley marks the birth of numerous industry disruptive startups, which later became tech giants. One such uncanny industry is food delivery. Realising the issue of eating outside, some companies came up with leveraging technology to bridge the gap between customers and restaurants. Now, food can be ordered with just one click.

Food delivery has become an indispensable part of our lives. One such company which changed the landscape of the food logistics market is DoorDash. The firm has covered a successful journey from a small startup to one of the largest third-party services in the USA.

But how the company surpassed its competitors to become the leading logistics company is worth exploring. Let's have a look.

The story goes back to 2012, where four friends worked on an app they had built to fulfill their common interest of serving small businesses. One must have quality in a great entrepreneur is familiarity with market conditions.

So, the founders started interviewing small business owners to feel the petty problems they used to face. One store manager in Palo Alto expressed her despair and showed them a booklet of orders that she couldn't fulfill due to the shortage of delivery drivers.

That incident built the foundation of a phenomenal success story as the founders had a lightbulb moment as they had figured out the problem to solve by leveraging technology.

The prototype of the app came into existence within a few hours. In 2013, Palo Alto delivery was founded by young Stanford students.

The dedication was such that the founders were delivery drivers delivering all over the Stanford campus at night. Soon it became door dash.

Doordash came into prominence gradually thanks to their delivery mechanism and started delivering food to many families and office workers who also faced food delivery issues. The company motto was to enable every merchant to deliver. After starting up, DoorDash secured its seed funding of $120000 from Y Combinator to consider a 7% stake.

The biggest challenge for a startup usually is to scale the product. In its second year of operation, DoorDash raised a handsome amount of $ 2.4 million from a group of VCs.

Doordash was trying to replicate a company like FedEx. Not merely a food delivery company, over the years, it has directed its efforts towards becoming a successful logistics company to benefit small businesses.

After one and half years of its launch, it signed a $ 17 million Series-B round funding from Sequoia Capital.

Soon, when people started getting acquainted with the company, it ventured into the hustling market of Los Angeles. After LA, it expanded into Boston also and introduced a cycle delivery service into its business.

In 2016, the logistics company commenced the enthralling alcohol delivery service in Southern California.

Tech founders realise the future of Artificial Intelligence led products, so this new age company also tests delivery robots into its daily orders.

In 2018, it collaborated with Walmart to venture into the grocery delivery market, which can be an exceeding business move. As of now, the company covers more than 20 markets in the USA and Canada. The startup's progress by leaps and bounds is proven by the fact that today it serves more than 450000 merchants and 20 million customers. Today, it has out shadowed its competitors like Uber Eats, GrubHub etc., to gain a colossal market share of 35% in the food delivery market.

DoorDash has created a link between restaurants and customers by providing them real-time on-demand service. A prominent factor behind the hype created by the company is its business model. So, the app gives the customers vast choices regarding their favourite restaurants to choose the kind of cuisine.

The company also uses Machine Learning models that track users' taste and give them recommendations based on their preferences. The company charges a 20% commission from the businesses connected with it. Besides this, the company has a surprising logistics system under which it delivers the orders in less than 15 minutes.

Users are charged a nominal fee of $5-$8 per order. DoorDash is providing a platform for businesses to achieve a wider customer reach. Well, it also provides advertising services to local businesses.

Providing advertising services is a rich source of revenue for the company. The company is employing some aggressive Marketing techniques and has kept $20 million as its marketing budget. It also aims at providing customers with a smooth payment experience by partnering with payment companies. The company takes the help of advanced tech and predicts customer behaviour.

The use of cutting-edge technology has made them stand apart by providing advanced data regarding customers to different restaurants. Some other revolutionary steps are reaching the masses by employing social media to be available for customers 24/7. The stellar business model has led them to earn a current revenue of almost $3 billion. It is astonishing.

It is irrefutable that providing value to customers is an instrumental step towards the ladder of success. It has contributed to the growth of DoorDash as apart from providing food to customers in such a convenient way. The company has created a win-win situation for stores and restaurants also. Besides this, it has generated employment visas for people as their delivery drivers. The trios of stores, customers and delivery drivers have proven to be the key towards this successful journey of the logistics startup.

A bright future lies ahead for the Silicon Valley Company as the pandemic lockdowns have resulted in incremental orders for the food delivery companies. Well, the journey from interviewing more than 200 store owners in Palo Alto to gaining more than one-third share of the market and becoming the leading third party services company in the USA has been worth exploring.