DoorDash is an American online food delivery service platform that now holds the largest market share in the US online food delivery industry. The company was founded in the year 2013 and in less than a decade, it has earned a leading position in the US market and is now aggressively expanding its operations to other countries.
SWOT Analysis is an effective tool for analyzing both the internal and external environment of the business. The below article would involve an analysis of the internal strengths and weaknesses of DoorDash along with the different opportunities that are available for growth. The analysis would also involve predicting the threats from the external forces and the strategies that the company can formulate to eliminate those threats. In case you wish to learn about conducting a SWOT analysis in detail, you should definitely go through our meticulous Swot Analysis guide.
Table of Contents
A meticulous SWOT analysis of DoorDash
- Market leadership- The company is liked very much by the customers and the fact is evident from the fact that over 20 million customers purchase from the company’s platform. Further, over 1 million delivery drivers are connected with the company to earn their livelihood. In fact, as per McKinsey and Company, DoorDash has a market share of 56 percent in the US online food delivery market and holds the share making it the industry leader.
- Strong restaurant network- More than 450,000 restaurants are associated with DOORDASH that serve food for all categories including Chinese, Mexican, Italian Vegan and non-vegetarian, etc. The huge presence of merchants provides the company with the advantage of serving different customers in a single presence which would ultimately lead to more customer base and revenue (DOORDASH, 2021).
- Consumer engagement- DoorDash has launched a unique program named WeDash wherein the executives and managers are also required to do monthly deliveries. This program has been designed to ensure executives understand the problems of delivery drivers and interact directly with the customers to understand their service expectations.
- Variety of services- DoorDash offers a variety of options to the customers that include home delivery service, a direct pickup facility from the restaurants and the customers are not charged any extra fees. The company also has a service known as DoorDash for work wherein the customers can order in bulk for the events. Further, the merchants can use the facility of DoorDash to fulfill the orders received directly on the merchant’s website as well.
- Limited presence- DoorDash’s major operations are in the market of US, and Canada and it has a little presence in Japan, and Australia and recently acquired a Finnish company to venture into new countries in Europe. Apart from these regions, DoorDash does not serve any market.
- Consistent losses- DoorDash is making losses on year on year basis. In 2018, the company made a loss of $59 million which increased to $200 million in 2019 and the losses have increased to $468 million in 2021 (DoorDash, 2021).
Opportunities for DoorDash
- Market diversification- The food delivery industry is growing at an enormous pace in many countries like India, China, and the UK among others. The Indian food delivery sector is predicted to grow at a high CAGR of 28.94% by 2026. The Chinese food delivery market is large in size and is worth $58.7 billion and it is also expected to register a double-digit growth of 12.1% from 2022 to 2027. Further, the food delivery market in the UK is very lucrative which is evident from the high average revenue of $470.66 per customer. Hence, the company should expand into these markets to increase its profitability. For that, the company will need a lucid understanding of the cultural dimensions within these countries.
- Venturing into more business segments- DoorDash can expand into various other business segments related to transportation like cab services. This would enable the company to enhance its customer base.
Threats for DoorDash
- Competition- While DoorDash is the leading market player in the food delivery segment in the US with a market share of more than 50% but still it has immense competition from various industry players like Grubhub and UberEats etc. UberEats is the largest food delivery platform in the US with a 27% market share and has been leading the market for the last few years. Grubhub is also a strong player in the food delivery segment and generated revenue of $2 billion in 2021 which was an increase over 2020’s revenue of $1.81 billion and currently controls 14% of the food delivery market.
- Change in government regulations- The US government is holding discussions for some time regarding reclassifying the delivery workers as full-time employees instead of gig workers. This would mean that the company would have to spend extra on providing those services such as minimum wages, insurance, paid leaves, etc. which can impact the financials of the company.
- Business instability- The company is consistently accruing net losses over the years. This means that the company has to burn cash in order to sustain itself. This would result in high outflows if the situation remains and therefore the company may be required to shut the operations in the near future. Hence, the company needs to incorporate the necessary transformations in alignment with a strategic change management process to address instability issues.
DoorDash’s losses are rising continuously over the last few years which can be challenging for the company. Further, the company has the potential to expand its operations in various emerging markets like India, China, and so on. But it needs to be varied because of the frequent change in business regulations in current times. Also, you can read the PESTLE Analysis of DoorDash to determine how the macroenvironment factors influence the company or the automotive industry.
DoorDash. (2020). DOORDASH, INC.. /s22.q4cdn.com. Retrieved 1 April 2022, from https://s22.q4cdn.com/280253921/files/doc_financials/2020/ar/628c3275-56ed-4bc8-a246-20e7c40742ce.pdf.
GLobeNewsWire. (2021). India 21.41 Billion Online Food Delivery Market to 2026: Focus on Bangalore, Delhi NCR, Mumbai, Hyderabad & Pune. www.globenewswire.com. Retrieved 1 April 2022, from https://www.globenewswire.com/news-release/2021/05/17/2230423/28124/en/India-21-41-Billion-Online-Food-Delivery-Market-to-2026-Focus-on-Bangalore-Delhi-NCR-Mumbai-Hyderabad-Pune.html.
Guarente, G. (2021). Seattle Passes Bill Requiring Delivery Apps to Get Permission Before Adding Restaurants. seattle.eater.com/. Retrieved 1 April 2022, from https://seattle.eater.com/2021/6/15/22535145/seattle-fair-food-delivery-act-apps-must-get-permission-before-adding-restaurants