Doordash and Pizza Arbitrage • Hacker News Board

Re: Doordash and Pizza Arbitrage

#41

Post by superfrank » Mon, May 18, 2020, 2:43 AM UTC

bransonf wrote: post #15

Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less) But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen? I'm not familiar with the reimbursement mo…

>The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

In the article they say:

> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.

I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.

Re: Doordash and Pizza Arbitrage

#42

Post by alteria » Mon, May 18, 2020, 2:44 AM UTC

This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot.

Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments?

From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.

Re: Doordash and Pizza Arbitrage

#43

Post by MattGaiser » Mon, May 18, 2020, 2:44 AM UTC

mlthoughts2018 wrote: post #38

MattGaiser wrote: post #31

Earlier quoted context omitted.

>rather having a large majority of other orders coming from these services. DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.

Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.

True, but then on to the next delivery startup :).

I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.

Re: Doordash and Pizza Arbitrage

#44

Post by xkcd-sucks » Mon, May 18, 2020, 2:45 AM UTC

throwaway_dflka wrote: post #11

ed312 wrote: post #2

Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

It's an interesting question. I suspect there's some trademark arguments to be made regarding confusion as to who is providing the product and service and whose failures any mistakes reflect. That kind of attribution, and the product quality it promotes, is one of the central purposes of trademark law. But there's also the first sale doctrine--that after you sell your physical product, people can do with it as they p…

All the regulation around food and beverage sales stands to the contrary - Normal people can't resell liquor, nor resell takeout food from a licensed restaurant.

Relatedly, it's surprising that delivery times aren't monitored because of (totally appropriate!) food safety laws on holding food at proper temperature

Re: Doordash and Pizza Arbitrage

#45

Post by Consultant32452 » Mon, May 18, 2020, 2:45 AM UTC

sherlock_h wrote: post #18

What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants

Chipotle has white labeled DoorDash for delivery in my area. If I open the Chipotle app and make a delivery order, the "track your order" screen says it's "Powered by DoorDash."

Re: Doordash and Pizza Arbitrage

#46

Post by 013a » Mon, May 18, 2020, 2:46 AM UTC

Consultant32452 wrote: post #36

bransonf wrote: post #15

Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less) But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen? I'm not familiar with the reimbursement mo…

>does anyone actually order franchise pizza on an app I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely s…

I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone.

I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?

Re: Doordash and Pizza Arbitrage

#47

Post by MattGaiser » Mon, May 18, 2020, 2:49 AM UTC

alteria wrote: post #42

This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot. Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments? From the outside it seems like they've duped investors…

DoorDash is winning in terms of market share for one thing.

https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-th...

I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.

Re: Doordash and Pizza Arbitrage

#48

Post by Consultant32452 » Mon, May 18, 2020, 2:49 AM UTC

013a wrote: post #46

Consultant32452 wrote: post #36

Earlier quoted context omitted.

>does anyone actually order franchise pizza on an app I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely s…

I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone. I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app;…

You may be right, and if so then I agree that it doesn't make sense to order PJ's, Domino's, or Pizza Hut through a generic app. My (perhaps incorrect) interpretation was based on the fact that I've never seen one of the big chains available in the generic delivery apps.

Re: Doordash and Pizza Arbitrage

#49

Post by imgabe » Mon, May 18, 2020, 2:49 AM UTC

Just some back-of-the-napkin math if you wanted to do this "right".

Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.

That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).

When I lived in DC, driving anywhere could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.

Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.

Re: Doordash and Pizza Arbitrage

#50

Post by LudwigNagasena » Mon, May 18, 2020, 2:50 AM UTC

dangoldin wrote: post #34

This quote summarizes it all for me: "Amazon just bailed on restaurant delivery in the U.S." If amazon, a "real" business with a reputation built on ruthlessly cutting margin can't get it to work why would anyone else?

There are many businesses Amazon doesn’t enter. I personally don’t see how Amazon’s strengths can help them compete against other food delivery services. After all, same day delivery is the norm there.