
DoorDash Wants to Own the Last Mile - steven
https://medium.com/backchannel/doordash-wants-to-own-the-last-mile-27c03098a657
======
bootload
_" 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](https://en.wikipedia.org/wiki/Kozmo.com)

[1] hint: phone & market size.

~~~
berberous
Kozmo did not charge delivery fees and I believe had their own
warehouses/inventory. I'm not sure what I think about the economics of these
delivery companies, but those are two pretty fundamental distinctions.

~~~
bootload
_" Kozmo did not charge delivery fees and I believe had their own
warehouses/inventory."_

I'd forgotten about the warehouses. Kozmo might have worked if the market was
as big as it is now ... and possibly looked at ways to become profitable.

 _" in 1999 the company had revenue of $3.5 million, with a resulting net loss
of $26.3 million.[5] The company raised about $250 million,"_

There was a lot of VC money thrown around but the number of employees and
scale... 1100 employees and 18 locations. I would have thought it would have
been best to win high values cities then expand gradually.

~~~
alaskamiller
DoorDash has pulled off the trick of charging 20% to the restaurants then $7
to the customer for the delivery.

So really they're a courier service paired with a lead gen service instead of
kozmo wanting to be a store that delivers.

The only other model that works is a pizza shop where they can make the
products and deliver too.

Waiter.com here in Silicon Valley must be so pissed that ten years in the game
they're still outshined.

------
sageabilly
This 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.

~~~
aggie
The tip is made in advance, when placing the order.

~~~
apapli
So you're tipping for what you expect will be good service?

~~~
erispoe
Tip is actually hardly related to quality of service. Michael Lynn's[1]
research shows that people reveal their prejudices through tipping more than
anything else. Being a young busty blonde female gets you way more in tips
than being a middle aged black male, regardless of the actual quality of
service.

In regards to that, I don't think tipping is a good system unless what you
want is pushing discrimination in the workplace even further. Service should
just be included in the price. But at least, the blind tipping model of these
apps eliminates that bias. If you don't know who will deliver, you are less
likely to tip the busty blonde girl more than the black man.

[1]
[https://sha.cornell.edu/about/directory/instructors/wml3](https://sha.cornell.edu/about/directory/instructors/wml3)

edit: grammar and typos

------
7Figures2Commas
The 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.

~~~
dkrich
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.

~~~
Animats
FedEx lost on that issue in California and Kansas, with other states to
follow.[1]

[1] [http://fedexdriverslawsuit.com/](http://fedexdriverslawsuit.com/)

~~~
dkrich
I'm not sure which issue you're referring to. Both FedEx and UPS have a
partnership with the USPS to have USPS deliver a large percentage of their
parcels for which they pay a fixed rate. They deliver the parcels in bulk to a
mail distribution facility and USPS brings them to your door.

More detail can be found here: [http://www.wsj.com/articles/u-s-mail-does-the-
trick-for-fede...](http://www.wsj.com/articles/u-s-mail-does-the-trick-for-
fedex-ups-1407182247)

------
condescendence
I wanted this to become something much more. I think their sights are too low
in terms of the ability of their product.

For example, I would turn this into a deliver anything platform that would
eventually be integrated with stores/restaurants...etc. Instantaneous
shipping. A mix between Peapod (for those who haven't used peapod its a
grocery delivery service), and Homejoy except with delivery drivers.

There's many more routes they could take, oh and the employee/marketing
associate discrepancy is a little messed up.

------
malandrew
This seems like a huge liability waiting to happen. By donning the jersey and
working at least once a month as a participant in their marketplace they blur
the distinction between employee and market participant, thereby opening
themselves up to having those that participate in the market more than 40
hours a week claiming that they are full time employees and are entitled to
things like benefits.

------
ck2
It does seem like any business that relies on labor being its one and only way
accomplish its business better be able to answer the question if it has
employees or contractors.

I do not like the idea of the future where no business has employees and
everyone is a contractor. Something seems wrong there.

~~~
malandrew
That's most likely a temporary worry. The future will be largely businesses
tasked reduced to processes that have been automated via robots/drones/etc.

------
dkarapetyan
eBay 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.

------
trevordev
I don't want this company anywhere near the last mile to me. DoorDash sent a
flyer to my house false advertising a coupon code. I spent half an hour
creating an order only to realize that the coupon they sent me was different
from what the flyer said. When I called to complain they acknowledged their
error but said they wouldn't do anything and that I should just place an order
anyways.

