DoorDash SWOT Analysis (2024)

Company: DoorDash
Founders: Tony Xu, Andy Fang, Evan Moore, and Stanley Tang
Year founded: 2013
CEO: Tony Xu
Headquarter: San Francisco, California, United States
Employees (2022): 8,600
Type: Public
Ticker Symbol: DASH
Annual Revenue (FY 2021): $4.89 billion
Profit | Net Loss (FY 2021): -$468 million

Did you know? DoorDash was founded by a group of Stanford University students in 2013.

Table of Contents

DoorDash Strengths

1. Absolute leader in the industry

DoorDash has managed to position itself as one of the best companies in its industry. The food delivery provider invests heavily in the sector and its drivers, giving it a strong competitive advantage.

DoorDash is an absolute market leader and controls 59% of the market share in the United States, followed by Uber Eats with 24% and Grubhub with 13% market share.

2. First mover and large customer base

DoorDash is one of the first companies to enter the US food delivery market and greatly benefits from this first-mover advantage. Most of the customers who interacted with the firm’s services during the earlier days got to know it from that perspective.

The notion has remained to date and continues to catapult the company to greater heights.

DoorDash serves more than 20 million customers in North America and Australia.

3. User-friendly platform

One of the key metrics that have remained central to the success of DoorDash is its user-friendly app and website. Customers can easily navigate the platform to get what they want to enjoy and place an order in a few clicks.

Most of the features on these platforms attract customers since they are able to drill down to the specifics of what they would like to eat.

4. Stability of the app and website

Customers know that they can rely on the DoorDash app and website. These platforms have a long uptime rating compared to other sites that could go offline unexpectedly or frequently need maintenance.

Such stability creates a good rapport with customers because they know they can order their meals any time of the day or night. All that you may want to confirm is that restaurants are open within your area of residence.

5. Wide network of riders

DoorDash provides its riders with good flexibility and packages. In return, this works in their favor because they attract a good number of customers who would like to deliver meals for them.

The large network of drivers ensures customer meals are delivered on time and at most locations. They are able to serve places where even their fiercest customers may not have visibility. The company has, on average, over 1 million per month dashers (delivery persons) in the US, Canada, and Australia.

6. Strong connections with restaurants

Being the pioneer of food delivery services helps DoorDash attract restaurants to list on the platform. The company’s strong market network enables it to offer a superior customer experience. They have more than 450K restaurants offering diverse foods to its loyal and new customers.

7. Membership program

The introduction of Dashpass was a major step in creating a growth path for the company. Customers who sign up for this membership program can order unlimited free deliveries for meals above $12 at eligible restaurants.

The cost of the subscription is $9.99 per month, besides a 30-day free trial. Dashpass is lucrative for both DoorDash and its frequent users.

8. Global operations

DoorDash does not just operate in the local market. Instead, the company also does focus on markets globally, opening operations in areas where it is likely to get active users.

It is currently in major global markets, including Japan, the USA, Canada, and Australia.

Such focus helps the brand to deliver quality service that satisfies customer needs. It leverages the strength of its network so that customers can order meals from their favorite restaurants, cuisines, and franchises. Additionally, a customer may opt to place an order to pick it up from the grocery, store, or restaurant.

9. Frequent charity contributions

Due to its strong financial position, DoorDash contributes to charities and nonprofits. The company recently announced plans to give away $1 million to Dashers and community nonprofits.

The idea is for ten Dashers to receive half a million dollars and donate the other half to a nonprofit of their choice. That goes on to cement the important role that DoorDash continues to play in communities.

10. Established network effect

Leveraging its existing network with merchants, DoorDash has the ability to attract more merchants, including national brands, to enrich the selections on its marketplace, which will drive more customer engagement. This, in turn, will increase the sales for merchants.

DoorDash has achieved a virtuous cycle of monetization. DoorDash has higher average quarterly sales per customer of $323 in the first quarter of 2022, way ahead of Uber Eats’ $246 and Postmates’ $195.

11. High customer loyalty

The subscription plan works out very well for DoorDash. According to Bloomberg, DoorDash’s DashPass subscription plan has a one-month retention rate as high as 69%, demonstrating high loyalty from customers.

DoorDash Weaknesses

1. Still reporting losses

Even though DoorDash has a huge market presence and revenue size, it still reports losses, and it has remained the trend since its launch in 2013.

Continued losses do not earn confidence from potential customers as they feel the company may collapse at any time. If the losses persist, there may be a time when these start to affect customer experience and satisfaction negatively. In 2021, DoorDash registered an operating loss of $452 million.

2. Not gone fully global

DoorDash has made efforts to expand its global operations. However, the company is not yet there as far as this is concerned. It has a presence in only four markets, including the USA, Japan, Canada, and Australia.

That means it is losing opportunities to make money in growing markets, putting a cap on its potential revenue. Currently, revenue streams are concentrated in the US market, which accounts for around 99% of total revenue.

3. Increasing delivery costs

DoorDash may be registering more users, but most of these end up not placing orders due to the increasing delivery costs.

As people order food through the platform, they get discouraged by the extra charges they will have to incur to enjoy a meal. Thus, they end up visiting the restaurant on their own.

4. High commissions

When DoorDash launched, it introduced a commission structure that has proven expensive over time. Restaurants that have a hard time keeping up with this commission structure switch to competitors.

Subjecting to the marketing plans and the size of the delivery area that a restaurant chooses, Door Dash charges either 15%, 25%, or 30% commissions from each order.

5. Similar services

Door Dash provides food delivery services that are similar to those of competitors, which means customers can easily switch to another player in the field.

Thus, ensuring a consistent customer experience is the key to keeping customers with the company, although it’s easier said than done.

DoorDash Opportunities

1. Expansion into new business-DashMarts

The virtual DashMarts introduced by DoorDash have the potential to take the company to higher ranks. These marts offer snacks, groceries, and food items from various restaurants.

Virtual experience in the restaurant industry, such as virtual kitchens, has experienced fast growth thanks to the pandemic. A virtual kitchen operates as delivery only with some takeout options while eliminating eat-in options.

2. Mergers and acquisitions

DoorDash can reduce competition by acquiring other small competitors, and that gives it the power to offer fierce competition against its rival firms.

The most recent acquisition is that of Wolt in June 2022, a Finnish food delivery platform. This has helped DoorDash to expand its geographical reach further.

3. Global expansion 

DoorDash only operates in four countries. It can improve its potential revenue by opening offices in unexplored countries with huge potential customers.

DoorDash will have continued growth in the US, and investment in new international markets will bring more traction to the business.

4. Monetization opportunities

Leveraging its established network of restaurants and customer base, DoorDash has the potential to increase the commission rate when it sees fit. This will help the company to better monetize its operations, with the possibility of finally turning a profit.

DoorDash Threats

1. Rising costs

Global political tensions have greatly increased the cost of fuel, which has a direct impact on DoorDash’s operations because the company relies on its large number of drivers.

To cope with this crisis, DoorDash said it will refund some of its drivers to help offset higher prices, and give drivers 10% cash back when they use the company’s debit card to purchase gas.

2. Reduced demand due to recession

A looming recession will reduce the number of people ordering meals due to tightened disposable income, which will hit the company’s revenue and profitability.

3. Complex regulations

The food delivery industry is subject to several rules and regulations concerning food safety and industry conduct. The rapid adoption of food delivery services by the public has drawn the attention of authorities such as the FDA, CDC, and FTC.

DoorDash will be faced with stricter regulations as the company expands its business. DoorDash settled a lawsuit for $2.5 million in May 2020 due to the company using tips to subsidize driver pay.

4. High competition

DoorDash faces fierce competition from other industry players, such as Uber Eats. If its competitors decide to take actions to further lower costs for customers, DoorDash will lose its customer base.

Technology is also an important factor to be taken into consideration. DoorDash heavily relies on technology innovation to boost customer experience, and failure to innovate would cause the company to lose customers.

References & more information