DoorDash Wants to Own the Last Mile
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DoorDash Wants to Own the Last Mile
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Re: DoorDash Wants to Own the Last Mile
#2"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
[1] hint: phone & market size.
Re: DoorDash Wants to Own the Last Mile
#3The 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.
Re: DoorDash Wants to Own the Last Mile
#4This 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.
Re: DoorDash Wants to Own the Last Mile
#5The 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…
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.)
Re: DoorDash Wants to Own the Last Mile
#6The 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…
There are other successful exits than being completely profitable and sustainable. There's always the "bought out by player with bigger pockets and/or competition" ending?
Are startup investors going back to profitability as their key measure? Some might hope so but I think traction and marketshare are far more visible right now...
Re: DoorDash Wants to Own the Last Mile
#7This 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 vet…
The tip is made in advance, when placing the order.
Re: DoorDash Wants to Own the Last Mile
#8The 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…
Exactly. The reason UPS and FedEx ceded last mile mail and package delivery to the USPS is that they weren't interested in dealing with the complex logistics of last mile delivery. Its unpredictable and unprofitable. They are interested in the meaty part of mail delivery: charging customers $20 to carry an envelope across the country on a plane, which has a marginal cost approaching zero for them.
Time will tell, but my theory on these last mile businesses that are springing up is that they are cramming into the market at precisely the places where there is the least money to be made, but offers the most convenience to customers. In other words, VC's are subsidizing luxuries that customers themselves have shown they won't pay for. This would be a great business if customers were willing to pay $20 to have food delivered, but the truth is that they aren't. At that point they will look for businesses that have delivery baked into the business model (ie, Dominos), or just go pick it up themselves.
There seems to be an inherent assumption somewhere that these businesses that don't offer delivery are out of touch or not tech-savvy, but the article touched on an important point with this quote: “There were many pages of orders, not just one or two,” he says. Finally, when spotting this phenomenon at a Palo Alto macaroon store on day, Xu asked why these orders weren’t being delivered. The answer was that the owner has opened his bakery to bake, and not deliver stuff. He got similar answers from people in other businesses, ranging from toys to furniture, to restaurants.
Maybe those businesses aren't interested in delivery for a reason. Just because you can build software for a smartphone doesn't mean the fundamental laws of P&L don't apply.
Re: DoorDash Wants to Own the Last Mile
#9The 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…
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…
But cars don't work in many dense cities like in Europe and in NYC. You need cycles or scooters.
Re: DoorDash Wants to Own the Last Mile
#10eBay 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.