🎯 Doordash’s market share robbery

A playbook for cracking established markets

October 24, 2023

Read time: 1 minute 54 seconds

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Doordash’s market share robbery

Chess Move

The what: A TLDR explanation of the strategy

DoorDash pulled off one of the most under-appreciated market share robberies of all time.

Between 2018 and 2021, they exploded from 16% to 53% (!) share of the US delivery app market.

So what exactly propelled the new entrant ahead of established players like Uber Eats, GrubHub and Postmates?

đź’ˇ

Strategy Playbook: Avoid the competition by targeting a greenfield underserved segment

Breakdown

The how: The strategic playbook boiled down to 3x key takeaways

1.  Prioritise high-value customers

DoorDash focussed on winning outer suburbs with large family homes - a largely ignored segment with significantly higher average-order-value (AOV) than urban regions.

Serving family dinner tables rather than city apartments generated more revenue (and therefore margin) per delivery (fixed cost).

Better unit economics (plus unparalleled venture funding to acquire customers) meant once Doordash claimed wealthy American suburbs, competitors were effectively priced out.

2. Win the long-tail

By prioritising the suburbs, Doordash would win restaurants without delivery services, often with pre-existing customer bases, rather than competing for newer restaurants with multiple other providers.

DoorDash expanded the delivery market instead of elbowing for room in the existing one.

3. Differentiate through proprietary data

DoorDash acquired restaurants by providing them with not just delivery services, but insights they never had before: popular dishes in the area, customer demographics, local delivery times, and more.

Superior tooling like the Merchant Portal and Business Manager mobile apps, plus native marketing features like Sponsored Listings and Promotions gave restaurants a suite of capabilities to optimise their own services.

These features became magnets for acquiring new suppliers that were less exposed to product innovations in the sector.

Rabbit Hole

The where: 3x high-signal resources to learn more

[4 minute read]

• A viral marketing campaign titled “Stay in Your Game”.

• A sponsored Fortnite tournament with each player representing a restaurant chain like McDonalds, KFC, and Taco Bell.

• A World of Warcraft character called “Orderyn” (aka “Order-in”) who delivers virtual food (and real discount codes) across Azeroth.

• A TikTok ad with a gamer ordering energy drinks and controller batteries so he “never runs out of juice.”

Delivery apps are all doubling-down on the next strategic growth lever: Gamers.

[3 minute watch]

Come for the now legendary pitch to become the “Fedex of today”.

Stay for the chaos in the YouTube comments.

[2hr 58 minute listen]

Easily one of the best episodes of the Acquired podcast doing strategic analysis.

To go deep on initial funding, bootstrapping supply, unit economics, and an unlikely journey to IPO, this is your click.

(Note: This episode was recorded live from the blockbuster IPO… 3yrs later, stock price is down -58%. 20/20 hindsight!)

That’s all for today’s issue, folks!

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