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DoorDash Wants to Own the Last Mile

49 points by steven 11y ago

bootload 11y ago
"Tony Xu is ready to do some Dashing. He’s wearing his bright red DoorDash T shirt. His water bottle is full. He’s got the Dasher app loaded on his iPhone." Can you spot the difference b/w this scenario and Kosmo [0] who attempted this in 2000? [1] [0] https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com [1] hint: phone & market size.
- berberous 11y ago
  Kozmo did not charge delivery fees and I believe had their own warehouses/inventory. I'm not sure what I think about the economics of these delivery companies, but those are two pretty fundamental distinctions.
  - bootload 11y ago
    "Kozmo did not charge delivery fees and I believe had their own warehouses/inventory." I'd forgotten about the warehouses. Kozmo might have worked if the market was as big as it is now ... and possibly looked at ways to become profitable. "in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million.[5] The company raised about $250 million," There was a lot of VC money thrown around but the number of employees and scale... 1100 employees and 18 locations. I would have thought it would have been best to win high values cities then expand gradually.
    - alaskamiller 11y ago
      DoorDash has pulled off the trick of charging 20% to the restaurants then $7 to the customer for the delivery. So really they're a courier service paired with a lead gen service instead of kozmo wanting to be a store that delivers. The only other model that works is a pizza shop where they can make the products and deliver too. Waiter.com here in Silicon Valley must be so pissed that ten years in the game they're still outshined.
7Figures2Commas 11y ago
The big question for all of the companies that want to be the last mile: can they run sufficiently profitable businesses without classifying their workers as 1099 employees? Mark my words: most of the "on-demand" startups that are relying on contract workers are not going to be able to defeat the misclassification lawsuits they're facing. Some might have the funds to delay the inevitable by strategically settling the first cases they're hit with, but the laws and legal precedents in this area are quite straightforward.
- fasdf3asdf 11y ago
  Most of the players in the industry are loudly (Uber) or quietly (everyone else) planning on eventually using fully automated delivery systems such as self-driving cars or UAVs, making the question moot.
- rogerbinns 11y ago
  I believe it will all end up owned by Uber (or similar) using self-driving cars. The vehicle is easily loaded at the supplier, and then you unlock a lockbox when it arrives to do the delivery. Dynamic pricing can be used to direct demand to low hours (eg delivery is $5 at midday but $2 at 2pm). The remaining question is how soon. A company trying to make use of a self driving vehicle for most hours of the day across a wide customer/usage base will find it far easier to spread the capital costs, than single purpose or single customer vehicles. There are also big advantages to having a larger fleet (economies of scale). Consequently the moment the self driving vehicles are somewhat practical, I expect massive attempts to corner the market for using them. (Human driven vehicles can still be used for trickier locations and journeys until the self driving tech matures.)
  - robk 11y ago
    But cars don't work in many dense cities like in Europe and in NYC. You need cycles or scooters.
    - rogerbinns 11y ago
condescendence 11y ago
I wanted this to become something much more. I think their sights are too low in terms of the ability of their product. For example, I would turn this into a deliver anything platform that would eventually be integrated with stores/restaurants...etc. Instantaneous shipping. A mix between Peapod (for those who haven't used peapod its a grocery delivery service), and Homejoy except with delivery drivers. There's many more routes they could take, oh and the employee/marketing associate discrepancy is a little messed up.
sageabilly 11y ago
This looks to be a big risk for the contracted delivery people since they're only getting paid the delivery fee plus the tip. Even working pizza delivery, you are still an employee and must make at least minimum wage. If you work for DoorDash you're absolutely dependent on tips. This leads me to a further line of thought- if DoorDash is classifying all of their delivery people as contractors do they have a robust vetting system for people who deliver for them? Heck, even with a robust vetting system I can see there being potential for serious altercations between a DoorDash contractor who just spent an hour taking a big order to a far-flung delivery address and the person who made the order who completely stiffs them on the tip.
- aggie 11y ago
  The tip is made in advance, when placing the order.
  - apapli 11y ago
    So you're tipping for what you expect will be good service?
    - SilasX 11y ago
      I don't think the decision of which roles are tipped (vs paid a piecework/wage) ever had any actual incentive-aligning logic behind it. Super Duper Burgers, for example, has zero table service, and you're expected to bus your tray. They still have tip jars and a tip field on the credit card slip. Convenience stores now have tip jars too. Don't try to reason with it, just follow established practice as best you can.
    - noer 11y ago
      That's how it works for the most part on Grubhub/Seamless & Delivery.com (if it still exists). Seamless defaults to a 10% tip or $2, whichever is greater. Grubhub & delivery.com both asked the user to enter a tip amount or select a predetermined amount of 10, 15 or 20%. I was a bike messenger doing food delivery for awhile. For the most part people tipped between 10-20%. The delivery person sees the tip in advance for the most part and can decide drop-off order based on that. Additionally, most people who've told me their tipping practices for food delivery usually have a predetermined amount regardless of service/time/basket size.
dkarapetyan 11y ago
eBay bought Shutl for similar reasons. If you want to see what a bankrolled start-up looks like doing last-mile deliveries then Shuttle is a good test case. I personally don't think this model has legs.
ck2 11y ago
It does seem like any business that relies on labor being its one and only way accomplish its business better be able to answer the question if it has employees or contractors. I do not like the idea of the future where no business has employees and everyone is a contractor. Something seems wrong there.
- malandrew 11y ago
  That's most likely a temporary worry. The future will be largely businesses tasked reduced to processes that have been automated via robots/drones/etc.
- thrill 11y ago
  Everyone being a contractor is the most honest economy I can imagine.
malandrew 11y ago
This seems like a huge liability waiting to happen. By donning the jersey and working at least once a month as a participant in their marketplace they blur the distinction between employee and market participant, thereby opening themselves up to having those that participate in the market more than 40 hours a week claiming that they are full time employees and are entitled to things like benefits.
trevordev 11y ago
I don't want this company anywhere near the last mile to me. DoorDash sent a flyer to my house false advertising a coupon code. I spent half an hour creating an order only to realize that the coupon they sent me was different from what the flyer said. When I called to complain they acknowledged their error but said they wouldn't do anything and that I should just place an order anyways.

49 points by steven 11y ago

"Tony Xu is ready to do some Dashing. He’s wearing his bright red DoorDash T shirt. His water bottle is full. He’s got the Dasher app loaded on his iPhone." Can you spot the difference b/w this scenario and Kosmo [0] who attempted this in 2000? [1] [0] https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com [1] hint: phone & market size.

berberous 11y ago
Kozmo did not charge delivery fees and I believe had their own warehouses/inventory. I'm not sure what I think about the economics of these delivery companies, but those are two pretty fundamental distinctions.
- bootload 11y ago
  "Kozmo did not charge delivery fees and I believe had their own warehouses/inventory." I'd forgotten about the warehouses. Kozmo might have worked if the market was as big as it is now ... and possibly looked at ways to become profitable. "in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million.[5] The company raised about $250 million," There was a lot of VC money thrown around but the number of employees and scale... 1100 employees and 18 locations. I would have thought it would have been best to win high values cities then expand gradually.
  - alaskamiller 11y ago
    DoorDash has pulled off the trick of charging 20% to the restaurants then $7 to the customer for the delivery. So really they're a courier service paired with a lead gen service instead of kozmo wanting to be a store that delivers. The only other model that works is a pizza shop where they can make the products and deliver too. Waiter.com here in Silicon Valley must be so pissed that ten years in the game they're still outshined.

7Figures2Commas 11y ago

The big question for all of the companies that want to be the last mile: can they run sufficiently profitable businesses without classifying their workers as 1099 employees? Mark my words: most of the "on-demand" startups that are relying on contract workers are not going to be able to defeat the misclassification lawsuits they're facing. Some might have the funds to delay the inevitable by strategically settling the first cases they're hit with, but the laws and legal precedents in this area are quite straightforward.

fasdf3asdf 11y ago
Most of the players in the industry are loudly (Uber) or quietly (everyone else) planning on eventually using fully automated delivery systems such as self-driving cars or UAVs, making the question moot.
rogerbinns 11y ago
I believe it will all end up owned by Uber (or similar) using self-driving cars. The vehicle is easily loaded at the supplier, and then you unlock a lockbox when it arrives to do the delivery. Dynamic pricing can be used to direct demand to low hours (eg delivery is $5 at midday but $2 at 2pm). The remaining question is how soon. A company trying to make use of a self driving vehicle for most hours of the day across a wide customer/usage base will find it far easier to spread the capital costs, than single purpose or single customer vehicles. There are also big advantages to having a larger fleet (economies of scale). Consequently the moment the self driving vehicles are somewhat practical, I expect massive attempts to corner the market for using them. (Human driven vehicles can still be used for trickier locations and journeys until the self driving tech matures.)
- robk 11y ago
  But cars don't work in many dense cities like in Europe and in NYC. You need cycles or scooters.
  - rogerbinns 11y ago

condescendence 11y ago

I wanted this to become something much more. I think their sights are too low in terms of the ability of their product. For example, I would turn this into a deliver anything platform that would eventually be integrated with stores/restaurants...etc. Instantaneous shipping. A mix between Peapod (for those who haven't used peapod its a grocery delivery service), and Homejoy except with delivery drivers. There's many more routes they could take, oh and the employee/marketing associate discrepancy is a little messed up.

sageabilly 11y ago

This looks to be a big risk for the contracted delivery people since they're only getting paid the delivery fee plus the tip. Even working pizza delivery, you are still an employee and must make at least minimum wage. If you work for DoorDash you're absolutely dependent on tips. This leads me to a further line of thought- if DoorDash is classifying all of their delivery people as contractors do they have a robust vetting system for people who deliver for them? Heck, even with a robust vetting system I can see there being potential for serious altercations between a DoorDash contractor who just spent an hour taking a big order to a far-flung delivery address and the person who made the order who completely stiffs them on the tip.

aggie 11y ago
The tip is made in advance, when placing the order.
- apapli 11y ago
  So you're tipping for what you expect will be good service?
  - SilasX 11y ago
    I don't think the decision of which roles are tipped (vs paid a piecework/wage) ever had any actual incentive-aligning logic behind it. Super Duper Burgers, for example, has zero table service, and you're expected to bus your tray. They still have tip jars and a tip field on the credit card slip. Convenience stores now have tip jars too. Don't try to reason with it, just follow established practice as best you can.
  - noer 11y ago
    That's how it works for the most part on Grubhub/Seamless & Delivery.com (if it still exists). Seamless defaults to a 10% tip or $2, whichever is greater. Grubhub & delivery.com both asked the user to enter a tip amount or select a predetermined amount of 10, 15 or 20%. I was a bike messenger doing food delivery for awhile. For the most part people tipped between 10-20%. The delivery person sees the tip in advance for the most part and can decide drop-off order based on that. Additionally, most people who've told me their tipping practices for food delivery usually have a predetermined amount regardless of service/time/basket size.

dkarapetyan 11y ago

eBay bought Shutl for similar reasons. If you want to see what a bankrolled start-up looks like doing last-mile deliveries then Shuttle is a good test case. I personally don't think this model has legs.

ck2 11y ago

It does seem like any business that relies on labor being its one and only way accomplish its business better be able to answer the question if it has employees or contractors. I do not like the idea of the future where no business has employees and everyone is a contractor. Something seems wrong there.

malandrew 11y ago
That's most likely a temporary worry. The future will be largely businesses tasked reduced to processes that have been automated via robots/drones/etc.
thrill 11y ago
Everyone being a contractor is the most honest economy I can imagine.

malandrew 11y ago

This seems like a huge liability waiting to happen. By donning the jersey and working at least once a month as a participant in their marketplace they blur the distinction between employee and market participant, thereby opening themselves up to having those that participate in the market more than 40 hours a week claiming that they are full time employees and are entitled to things like benefits.

trevordev 11y ago

I don't want this company anywhere near the last mile to me. DoorDash sent a flyer to my house false advertising a coupon code. I spent half an hour creating an order only to realize that the coupon they sent me was different from what the flyer said. When I called to complain they acknowledged their error but said they wouldn't do anything and that I should just place an order anyways.