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Doordash and Pizza Arbitrage

themargins.substack.com

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Re: Doordash and Pizza Arbitrage

#251

Post by Traster »

cletus wrote: post #166

Wow, that was great. And honestly good on them for profit-taking on this arbitrage. The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here. When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably…

This is like the iPhone SE conversation - there was always a big group of people who would tell you that the reason they buy the iPhone SE is because it's the smallest iPhone. But its very clear that the company making iPhones is certain that people buy the iPhone SE because it's cheap.

It's the same here. Everyone will always tell you that these knew gig economy companies are so much better! Their service is better, they're quicker, you don't have to deal with people, you can order whenever you want etc. etc. But actually, it's probably going to turn out it's just cheap.

It's very likely these services are basically used by 90% of people because they're cheap, and they're cheap because they're losing money to gain market share. The problem is that once they need to turn a profit, they have to drive up margins and now that $16 pizza needs processing fees and costs for the delivery driver - now it's $22. Or more importantly, your $8 starbucks order is now $13. So the second that the prices reflect the true costs these businesses are going to shed customers like you wouldn't believe. Oh and in order to try and curb those costs you're going to see some guy in a broken down car do a tour of the city delivering everyone else's food before yours gets to you.

Re: Doordash and Pizza Arbitrage

#252

Post by zappo2938 »

JumpCrisscross wrote: post #220

I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbour…

The place where these companies intend to make their profit is on charging for the credit card transaction.

Re: Doordash and Pizza Arbitrage

#253

Post by yreg »

shiftpgdn wrote: post #215
ramraj07 wrote: post #214

Earlier quoted context omitted.

But they still paid full price to the restaurant! Someone in doordash knew the real price at some point then!

The full price was paid because a door dash card was used to pay for the order on pickup.

Which should have triggered some sanity check indicating that their scraped data is way off.

Re: Doordash and Pizza Arbitrage

#254

Post by Apocryphon »

MattGaiser wrote: post #138
balls187 wrote: post #120

Keep reading the level of skullduggery these companies go through and keep saying to yourself "Tech is a meritocracy." Yeesh.

Merit for businesses is defined by consumer acceptance and consumers love these apps.

That's equating merit with user acquisition, which is the very thing that's fueling the (hyper-)growth of unsustainable unicorns!

Re: Doordash and Pizza Arbitrage

#255

Post by blueblisters »

three14 wrote: post #223

The real arbitrage opportunity is for a competitor to DoorDash to place orders through DoorDash, and pay the delivery person a small fee plus let the delivery person collect the DoorDash fee. You could scale this up to huge numbers. Curious if doing so would survive a lawsuit. On the one hand, DoorDash could argue that it's unfair competition, but only by admitting that their deliveries are priced too low, which itse…

How would the competitor get customers to pay higher than what DoorDash charges?

Re: Doordash and Pizza Arbitrage

#256

Post by timvdalen »

ChuckMcM wrote: post #147

I love this story, especially about ordering dough pizzas. It reminded me of this twitter thread: https://twitter.com/meslin/status/1225834920611848192?lang=e... In which the author tries to order the Uline "box of boxes", a box of twenty-five (25) 6" x 9" x 6" boxes, only to have Amazon deliver a 6" x 9" x 6" box containing some random product. The collection product from Uline has the same bar code as the box itsel…

I hadn't realized that cardboard boxes were that expensive!

Re: Doordash and Pizza Arbitrage

#257

Post by taurath »

jimbob45 wrote: post #233
JumpCrisscross wrote: post #220

I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbour…

This really makes me happy but I hope you delete this before it becomes mainstream and DD catches on.

I hope it goes mainstream and they all go under because nobody wants to pay their crazy prices while not actually supporting a restaurant

Re: Doordash and Pizza Arbitrage

#258

Post by doublesCs »

JumpCrisscross wrote: post #220

I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbour…

I've always dreamt of having a post of mine read in court.

Hi judge!

Re: Doordash and Pizza Arbitrage

#259

Post by yedava »

MattGaiser wrote: post #208
Barrin92 wrote: post #168

Earlier quoted context omitted.

I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve? I al…

> I also don't know how "not having to talk to someone" is a perk. For us introverts it is.

It is indeed a perk for an introvert like me, but having to chose between empathy for another human and my discomfort, I prefer the former.

Yes, it will cause me anxiety to talk to someone, and go pickup an order. But if I was to avoid that and use an app, I'd be dipping my hand into their pockets and stealing money for a middleman. So I end up calling my preferred restaurant and picking it up myself.

Re: Doordash and Pizza Arbitrage

#260

Post by hnick »

PopeDotNinja wrote: post #239
hnick wrote: post #201

Earlier quoted context omitted.

I dunno, even at physical restaurants or cafes I often have issues where they didn't hear my order correctly. Just today I had a guy repeat my order (thank you to people who do this, it's the only way) and he'd forgotten the cheese. Phone calls to ethnic restaurants (as with GP, no offense intended) are another layer of trouble. With my local noisy Indonesian restaurant we had a 50% miss rate on our orders so usually…

I almost never have problems making custom food orders in the USA, even when the order taker is not a native English speaker. "I'd like a cheeseburger, only lettuce and ketchup." But when I visited Australia, I had a much harder time placing the same order. Most of the order takers there were not native English speakers, and I learned pretty quickly that the difference between American English and Australian English…

Growing up as a kid in a small town I thought I knew what Chinese people sounded like, but they were mostly Australian born (China wasn't really "open" at the time). Going to France and the USA and hearing their accents was confusing. It was close enough to be familiar yet very different at the same time since the same base accent got mixed up in different ways.

Anyway, yeah. I'm also a soft speaker which is my problem, but it doesn't mean that's not a valid reason to prefer text! I don't avoid speaking to people, I just prefer not to and I find it simpler and more certain I'll get what I need that way. Others want to pick up a phone.

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