Doordash is squeezing more and more profits as the taxi for your burritos
The platform is seeing higher delivery volumes while growing alternative revenue sources.
Meal-delivery company DoorDash is back in the black, reporting $162 million in profit in its latest quarter, after beating expectations on virtually every one of its key metrics.
Services like DoorDash make their money largely by charging fees — commissions, payment-processing fees, and delivery fees — on their platforms. Obviously, one path to making more money is to sell more food and drinks through the app. DoorDash did that, with orders rising to 643 million, up 18% year on year. The other way is to hike its fees, sell more of its subscriptions like DashPass, or sell advertising in-app. It’s done those, too.
Earlier this year, DoorDash said it had reduced its fees for customers who weren’t part of its DashPass subscription service. But when you look at the raw figures, the company is finding a way to earn a bigger slice of the sales that go through its platform. In early 2019, the company’s revenue, as a share of the Gross Order Value that goes through its marketplace, was 8.5%. In the latest quarter it was 13.5%. In its filings, the company said this increase was predominantly “due to increasing contribution from advertising revenue and improvements to logistics quality and efficiency.”
However, over the summer, the company and many of its rivals hiked their charges in reaction to new minimum-wage laws for delivery workers in New York City and Seattle. The effects of these changes for the customers? A staggering 58% increase in food-delivery fees for typical New Yorkers, according to a city agency report.
More recently, DoorDash has teamed up with with Lyft to offer ride discounts to its subscribers — a clear move to keep its mobile-delivery rival Uber in check. The company also recently started offering products from supermarkets, pet stores, and mattress retailers, and is experimenting with drone deliveries.
