3 reasons why DoorDash dominates the market and UberEats couldn’t?
The underlying facts why DoorDash is the most successful food delivery app in North America
Most restaurant owners and managers call the delivery food apps, such as DoorDash, UberEats, and Grubhub, a “necessary evil” especially during the COVID-19 pandemic. The reason is the less control on orders and high commissions to pay for maintaining their menus up online . Whether we like or not, delivery food market has become an indivisible part of Restaurant Industry and vital for the others’ survival.
In North America, DoorDash has now 53% of the US market, while UberEats has 32% and Grubhub 13%. So why Uber with its global brand popularity and capital could not beat DoorDash in North America?
Here are the strategical reasons why DoorDash has dominancy in the North American market:
Starting Small and Far
From the first days of developing early versions of the mobile app, the co-founders decided to mark suburban areas and small communities as their territory.
The decision was made on the basis of a discovery that people living in less dense areas place larger portion compared to city dwellers. This strategy was the opposite to the operation strategy that giant competitors chose to follow. Both UberEats and Grubhub started their operation in large cities, including London, Chicago, and San Francisco.
Medium Commission, Highest Delivery Fee
Restaurants pay commissions to the delivery apps for keeping their menus live. Comparing key players, UberEats charges 30%, DoorDash 20%, and Grubhub 10%. Logically, restaurants should choose Grubhub, however, there are two other reasons that would make DoorDash a superior option for restaurants; the publicity of the app.
Accessability for people defines publicity. Not the software side essentially, but the availability of drivers to deliver the food in the least amount of time. DoorDash has increased its number of dashers in years by easing the employment process and incentivising through paying higher delivery fees.
A Good Merge
In an intensive market, merge and acquisition is a powerful way to increase sales, resources, and ultimately the level of share in the market. By buying Caviar in 2019, a rival delivery service for high-end restaurants, DoorDash had a leap growth in accessing customers from suburban areas to high-end restaurants in the cities.
Diversifying the range of customers through its recent acquisition enabled DoorDash to get more registered accounts for its DashPass promotional discount feature. The newly defined feature helped the app company to secure monthly payments for its growth.
Uber acquired Postmates in Fall 2020 hoping to expand its presence in the market. It actually helped, but not as expected. As Rich Duprey states in his online post, surprisingly Postmates was losing money and moving downward in the middle of the pandemic when the market boomed.
Conclusion
I personally believe that starting, running, and succeeding a business is partially hard work and knowledge, and the other deterministic factor is luck. DoorDash has so far taken many rightful steps compared to its rivals, however, it seems the tactical mistakes from direct competitors have also played important roles to solidify DoorDash dominancy in the North American market.
Academic Resource: Agnihotri, A., Bhattacharya, S., DoorDash: In Search of Profitability. 2021. Ivey Business School.
