A Sustainable Solution For DOORDASH
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Here is my final project for my product management course. I chose the company Doordash, a third-party food order and delivery platform because of its relevancy during COVID-19. Although this industry has been one of the fastest growing industry, I find the current business and growth model for the aggregation platforms not sustainable. "Cloud" kitchen will be a big segment, but due to the low entry and exit barriers, the competition in that space will be fierce too shortly. To achieve optimization of profitability, restaurants operators will seek for other options unless the third-party food order and delivery platforms truly align their business goals with those of the restaurants.
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A Sustainable Solution For DOORDASH
- 1. DOORDASH By: Bing Zhang PRODUCT SCHOOL FI NAL PROJECT PARTNER APP
- 2. What Is The Problem Restaurants Quitting Third-Party Food Order-Delivery Platforms
- 3. Digital food delivery projected to be a $467B by 2025 Morgan Stanley 2020
- 4. PRODUCTMISSION To empower local businesses and generate new ways for people to earn, work and live. CORE VALUE To connect people with possibilities and best in the cities, and build stronger communities. GOAL Continues to grow Doordash marketplace by retraining existing restaurant partners and diners and adding new restaurant partners and diners. An online platform that offers on-demand food order and delivery service. DOORDASH Mission, Core Value, Goal & Product
- 5. OWNED DIGITAL TRENDING Increasing number of restaurant operators are building their own digital order and delivery solutions PHONE ORDERS Traditional way of phone ordering directly from restaurants remains the primary competition AGGREGATION PLATFORMS Grubhub UberEats Postmate New comers DOORDASH Soaring Competition Ordering directly from the restaurants remains the primary competition
- 6. "Fresh food sellers can’t afford to ignore the consumer demand, even though most orders lose money" Wall Street Journal
- 7. COVID-19 has accelerated restaurant's need for innovative solutions
- 8. Why is this an important issue for Doordash to solve ???
- 9. DOORDASH Growth Model - Flywheel Restaurant acquisition and retention impact diners' activation and retention
- 10. R R T A ONLINE DINER Life Time Value M C DOORDASH Restaurant activation and retention impact Doordash revenues #= X X X X X Avg. Value per Order Total No. of Orders Per Day Retention Time Period Retention Time Period Profit Margin Commission Rate RESTAURANT Avg. Daily Online order Revenues DOORDASH Total Order Revenues
- 11. Restaurant Owner JOBS PAINS Grow net income Open another location No contact with platform diners Extra headaches such as additional staffing, training, over stressed kitchen during peak hours, packaging cost etc. Low margin from platform orders Less control over platform diner's experiences KEY PERSONA Partner-Restaurant Owners Kendo 45 yr-old Fig's Owner Dallas GOALS ALTERNATIVES To provide dine-in customers stellar dining experience To deliver off-premise diners the best quality food Grow customer base “ The joy is in cooking for others.” Seeks other solutions for online order and delivery, such as his own order app Deactivates Doordash platform during peak hours Encourages diners to order directly Marks up menu prices on the platforms
- 12. Opportunity Hypothesis If Doordash can help optimize restaurant's profitability, it will improve restaurant acquisition & retention
- 14. ONLINE DINER INSIGHTS Survey Result - Why Chose One Platform Over Another CONSISTENT PRICE Discounts, markups & fees RELIABLE SERVICE Food & delivery as expected SELECTION OF RESTAURANTS/ MENUS Quality food choices
- 15. ONLINE DINER INSIGHTS When asked, given the option, if they’d prefer to order from restaurants directly 80 % Online diners in my survey prefer to order directly from local restaurants More money to local businesses Restaurants care more about their satisfaction *Note: 70% of consumers prefer to order direct from restaurants, not third-party services, according to 2018 Hospitality Tech report
- 16. RESTAURANT CONCERNS For Partnering With Third-Party Food Order-Delivery Platforms No access to platform diner's info Commission fees 20%-35% Fear of losing control over platform diner's experience
- 17. DEACTIVATES THIRD-PARTY DELIVERY PLATFORMS DURING PEAK HOURS “Kitchens were being flooded with third party orders during peak times, which have lower profit-margin due to the 30% third-party fee. Dine-in or 100% tickets were getting more difficult to manage, and that wasn’t making sense for the business.” "CULL THE HERD" OF DELIVERY TABLETS "Since costs have risen along with sales, I do not see a profit boost from the deliveries, just better publicity.” OWN ORDER APP AND DELIVERY "When 60% or more orders are from third-party App during COVID-19, the commission fee really hurts profit margin. It will be better off building my own app, having access to diner's info and more control over diner's experience." USER STORIES Restaurants Driven By Profitablitbity CALL ON DINERS FOR SUPPORT "I encourage diners to order from our restaurant directly to support local businesses."
- 18. DREAMING DOORDASH maintains current profit margin Doordash subsidizes RESTAURANTS maintain current profit margin Restaurants take less ONLINE DINERS not pay extra Online diners pay more DILEMMA Long-term Economic Equations Not Add Up
- 19. STRENGTHS Advanced platforms and tech resource Over 340,000 restaurant partners Around 30 MM active users Aggregated big Data Strong finance backed by VC's WEAKNESSES Limited control over online diner's experiences and satisfaction Gaps in the product range offered by Doordash Has not made profits OPPORTUNITIES Soaring demands and changing behaviors during COVID-19 Enhanced brand image by cutting restaurant partner's commissions during COVID-19 More demands for quality selection of food on the platform than supplies New techonology advantages THREATS More restaurant-partners are building their own independent food order and delivery solutions Diner's preference to order directly from local restaurants Unforeseeable government regulations Public pushback on fees Increasing labor cost & movement Low entry and exit barriers challenge retention Unforeseeable actions from other third-party platforms S W O T DOORDASH SWOT Analysis
- 21. PROPOSED SOLUTOINS Similar to online stores. The low cost tech driven delivery-only “Cloud" Kitchens are catered only to online diners. Doordash can take advantage of its aggregated data to help curate desirable menu selections. The cloud kitchen requires much less space and can be setup and expanded to multiple locations fast. COVID-19 has prepped for it. "CLOUD" KITCHEN Doordash helps build and host restaurant's own-branded order APP. Partner APP offers restaurants their own branded order apps integrated with their POS sys and Doordash Merchant Control Portal. The restaurant own-branded app will give restaurant-partners the ability to communicate with online diners at a flat fee with multi-tier commission rates and add-on services. PARTNER APP- A RESTAURANT OWN ORDER APP + OPTIONAL SERVICES A video / audio channel where restaurant operators/dashers can learn from Doordash data insights and the best of industry practice on menu selections, staff training, space designs and more to adapt the latest online diner's preferences. DOORDASH UNIVERSITY 2 3 1
- 22. High High Low Effort Partner APP "Cloud" Kitchen Knowledge Center Value 3 2 1 PRIORITIZATION Value v.s. Effort
- 23. Product Goal Increase revenue growth by 50% within 6 months after launch
- 24. PRODUCT Mockups Doordash current merchant portal and tablets are integrated with restaurant APP and POS sys, same menu and prices across all. Restaurant POS Order APP Restaurant Branded Order APP Current Merchant Control Portal same menus,prices & offers Server
- 25. Diner Direct Messaging to Restaurant No onion in my order pls No prob Diner Name dinera@diner.com Order # 0000000 Order Item 1 Order Item 2 Restaurant Access to Diner's Info Restaurant's Own Branded APP PRODUCT Mockups Restaurant's Name Restaurant's Photo Restaurant's menu Order Now
- 26. DD- Source ? Delivery Agrmt NO YES YES YES NO NO += option to order from R or DD Subscription Fee Agreed delivery $$ paid to DD Agreed delivery & commission $$$$ paid to DD Agreed commission $$ paid to DD Pickup / Delivery Need delivery ? $0 commissio n charged Need delivery ? $$ Agreed % commissio n charged PRODUCT How Does It Work Online Diner Doordash SERVER Doordash APP Dynamic Commission Delivery fee Add-ons Doordash DELIVERY PLTFM $0 to Doordash Restaurant APP Powered by Doordash OR Doordash REVENUE
- 27. Metrics For Restaurants Acquisition Activation Retention Revenue Referral No. of new partner signups (monthly, annually) Churn rate (monthly, annually) Avg. No. of accepted orders (D1, D7, D30) Avg. earning per order PRODUCT Key Success Metrics Measured against current commission-only model
- 28. Integrated R-Branded APP Direct Communication Subscription Multi-tier commission Add-on Services VALUE PROPOSITION Must-Have Features For Partner APP A restaurant branded APP that is integrated with its POS and KDS sys and controlled by the current Doordash merchant control portal, and also enables diners to order directly from restaurant Ability to direct communicate with diners Monthly / Annually flat subscription fee Optional access to extra data, promotion opportunities, Doordash delivery service, and in- house delivery mgt tool. Multi-tier commissions based on the source of the orders, total No. and/or value of the orders Partner APP
- 29. Menu Price Accuracy Delightful User Experience Broader desirable menu selection Consistent price online Fewer order errors due to integrated sys and direct communication with restaurants PRODUCT Benefits To Diners
- 30. Revenue Competi -tivness Loyalty Optimize Resources Recurring revenues and multiple revenue streams Differentiate itself and gain competitive edges More satisfied restaurant parters and diners result in higher retention rate Amplify its current resources to help restaurants with what matters most to them, which in turn improves online diner's experiences Collect diner's data whether orders from restaurat own apps or Doordash platform More Data Collection PRODUCT Benefits To Doordash Sustainable Growth
- 31. Tracking, followup 1 2 3 4 6 75 PRODUCT Launch Plan Work with Biz Dev, release alpha version to selected chain- restaurant partners Release beta version to a larger group of partners Collect feedback & necessary data Make changes based on the feedback and data, and A/B testing Work with mktg, biz dev on press release, blog, social media posts and email blast, call partner and non- partner restaurants Release product to all restaurants
- 32. PRODUCT Pricing $ /mo + $399 Setup Fee Monthly Plan PER STORE 249 $ /mo + $199 Setup Fee Annual Plan PER STORE 169 Multi-tier 10%, 12%, 15% $ 6.95 + $ 1.2 0 For the 1st mile Restaurants can also ask diners to share delivery fees Per extra mile Commission Delivery ( )
- 34. THANK YOU Q & A