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DoorDash and Societal Arbitrage

themargins.substack.com

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Re: DoorDash and Societal Arbitrage

#81

Post by SpicyLemonZest »

tartoran wrote: post #66
TeMPOraL wrote: post #54

Earlier quoted context omitted.

Clever, but how long until Takeaway.com and others add a clause in their contract against putting such business cards in their order? These companies have power over restaurants, because they can ruin a restaurant's reputation until it yields and accepts the new contract.

How long until some actor emerges who provides a network of ordering sites hosted on the cloud that charge $30-50 a month for each restaurant and nothing more? As margins get thinner and thinner this is inevitable. And no marketing needed, if the service is good word of mouth would do it.

If I’m understanding you correctly, that already exists as Square Online, although I think they’re a bit more expensive than that. A lot of restaurants near me use it.

Re: DoorDash and Societal Arbitrage

#82

Post by disgruntledphd2 »

Heliosmaster wrote: post #47
lmm wrote: post #19

Earlier quoted context omitted.

I'm happy to pay a fair price. But I don't want to have to deal with the terrible websites most local restaurants manage to put together, and I definitely don't want to have to phone in my order. Using an app is absolutely a better way to live. If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else.

What about Just Eat (also known as takeaway.com)? Restaurants sign up but they have their own drivers. A common interface / middleman for all restaurants. At least it was so in the Netherlands.

Sadly they have no adopted the Uber/DoorDash model to compete. In the process, they went from being profitable to unprofitable.

Is there a Gresham's law for business models, something like bad business models drive out good?

Re: DoorDash and Societal Arbitrage

#83

Post by impendia »

TeMPOraL wrote: post #54
fxtentacle wrote: post #51

"We know restaurant ‘partners’ are a flight risk because this is not a genuine partnership, it’s extractive." In my area, there's a pizza shop that is doing well. They also sell on Takeaway.com. But if you order through that - like I initially did - they'll give you a small business card that says "Did you know that our prices on Takeaway.com are 15% higher to compensate for the fees that they charge us?" And on the…

Clever, but how long until Takeaway.com and others add a clause in their contract against putting such business cards in their order? These companies have power over restaurants, because they can ruin a restaurant's reputation until it yields and accepts the new contract.

> Takeaway.com and others add a clause in their contract against putting such business cards in their order?

Possibly, buried in the fine print somewhere, but enforced by whom? Aside from the restaurants, only the drivers will see the food. Will they be ratting out the restaurants to their corporate overlords? I doubt it.

Re: DoorDash and Societal Arbitrage

#84

Post by [deleted] »

lurker619 wrote: post #14
lacker wrote: post #9

To me, this is the key claim of the article: This is not a genuine partnership, it’s extractive. Is DoorDash extracting money from its users, the restaurants and the delivery drivers? Or is it actually providing something of value? To me, the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Maybe the drivers are underpaid, maybe the rest…

I agree 100%. I don't think I'd ever order so much from random local restaurants if they weren't easily available in the doordash/ubereats apps in a standard format at the click of a button. No way would I google, search and decide a menu, then call up, I'd just eat from my local subway every time.

[deleted]

Re: DoorDash and Societal Arbitrage

#85

Post by Pfhreak »

bee_rider wrote: post #17
Pfhreak wrote: post #7

Add to this that DoorDash, Uber, etc have given authority over wages and performance evaluations directly to the customers. (Through the practice of delegating tips and ratings to the end user.) There's a clear imbalance of power there -- it costs the customer nothing to not tip or to leave a one star review. But those things could absolutely impact someone's earning potential as a worker. Consider how many people se…

How do these services actually work? Since it is apparently just a system to connect customers, deliverers, and sellers with each-other, I assume (not really, but...) the deliverers can set their minimum pay? If not, that would be an interesting experiment.

Deliverers cannot set their pay. It's a take it or leave it model where DoorDash basically says, "we have a delivery we will pay x".

Re: DoorDash and Societal Arbitrage

#86

Post by lotsofpulp »

black_puppydog wrote: post #73
lurker619 wrote: post #14

Earlier quoted context omitted.

I agree 100%. I don't think I'd ever order so much from random local restaurants if they weren't easily available in the doordash/ubereats apps in a standard format at the click of a button. No way would I google, search and decide a menu, then call up, I'd just eat from my local subway every time.

I've started using Deliveroo a bit during the lockdown here in France. But frankly... it's just faster to go downstairs. There are superb restaurants all over the place within literal (!) spitting distance of my door/windows. Snack food, too. I know it's not a short term solution, but the US seems to have painted itself into a bit of a corner by separating commercial and residential areas so much...?

The US isn’t that bad, at least where I’ve lived in coastal cities. Reading someone choose subway of all places over a few minutes of using the internet is a first for me.

Re: DoorDash and Societal Arbitrage

#87

Post by Retric »

wwn_se wrote: post #15
Retric wrote: post #13

Earlier quoted context omitted.

Gross revenue is before expenses. Software tends to have great margins but retail can easily be 1% profit margin. So in many industries that’s a limit of just over 10 million per year in profit.

True still not really "mom and pop" at least in my mind.

Small business in the US is really ambiguous, but mom and pop is used very differently than small business. IMO, this bill doesn’t really line up well with the classic small / mid sized distinctions, but that’s political. Everyone wants to say they helped small businesses, and this is aimed in that general direction.

“In the United States, the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7.5 million in annual receipts for most non-manufacturing businesses.[4][5] The definition can vary by circumstance—for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.[6]” https://en.wikipedia.org/wiki/Small_business#Size_definition...

A sub 500 person factory could easily be too large for this bill, on the other hand an ACA small business would be tiny by comparison.

Re: DoorDash and Societal Arbitrage

#88

Post by mdorazio »

Dirlewanger wrote: post #63
cmeacham98 wrote: post #25

Earlier quoted context omitted.

Maybe you're not aware, but prop 22 actually passed and helps gig economy companies like DoorDash .

And a majority of gig workers also were in favor of it.

Desperate people tend to be in favor of things that let them keep their jobs, regardless of how exploitative and shitty. This is not a good argument in support of anything.

Re: DoorDash and Societal Arbitrage

#89

Post by MattGaiser »

Heliosmaster wrote: post #42
lacker wrote: post #9

To me, this is the key claim of the article: This is not a genuine partnership, it’s extractive. Is DoorDash extracting money from its users, the restaurants and the delivery drivers? Or is it actually providing something of value? To me, the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Maybe the drivers are underpaid, maybe the rest…

Incentive are not aligned anymore. Example: I order a pizza through Deliveroo. The driver doesn't care about either the restaurant or me, so he chucks the pizza vertically in his box, ruining it. I get a shitty pizza, I won't order anymore from the restaurant. Compare this with me calling up the restaurant and having one of their employees delivering the pizza: the restaurant has all the incentives for me to enjoy th…

> so he chucks the pizza vertically in his box, ruining it.

That is why you review the driver and food separately.

Re: DoorDash and Societal Arbitrage

#90

Post by mdorazio »

> Doordash built a $25 billion business powered by a combination of regulatory and labor arbitrage.

This is an excellent encapsulation of most of the gig economy in one sentence and explains why I hate the entire thing. It's only a valid business model by taking advantage of people and sidestepping regulations, all funded by VC money rather than actual profits.

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