What do you do when you crave street food in the middle of the night? Or when you want to have food from your favorite restaurant but don’t feel like going out to get it?
Did you say you use DoorDash to order your favorite cuisines online and then receive them on your doorstep? Well, that’s what we expected.
DoorDash has emerged as the leading food delivery company in the US. Currently, it is dominating America’s online food ordering industry by capturing 53% of its market share. Moreover, DoorDash has successfully captured this as well as the international market in a remarkably short period of time.
Looking at the success that DoorDash has attained, we feel the need to carry out a DoorDash SWOT Analysis. The purpose of conducting this SWOT analysis is to closely look at both internal and external factors that impact DoorDash.
You guys must be familiar with DoorDash, but many people reading this article might not know the history of DoorDash. It’s okay, don’t worry guys, we’ll tell you all of it.
DoorDash has an exciting history. Back in 2012, four students of Stanford University came up with an idea to develop an app that would provide a solution to the problems of worried restaurant owners of Palo Alto, who were unable to deliver orders because of a lack of drivers.
It took them less than a year to translate their thoughts into reality. In 2013 DoorDash was born, and within half an hour, it received its first order. This was a dream come true for the people of Palo Alto; now, there was a food delivery company that would deliver your favorite meal right at your doorstep.
Soon it gained popularity all across the US, so DoorDash decided to expand its operations in the entire US. So a company that started off in a small city in California is now providing its services in all the states of America.
Besides expanding its operations in the entire US, DoorDash has also moved to international markets. This move of global expansion has benefited the company to a great extent as it has increased DoorDash’s revenue and market share.
Within a few years, DoorDash managed to attract 25 million users who can order from 390,000 different restaurants through the food ordering company. Moreover, it has also provided employment to over a million riders, which is remarkable.
You’d agree that DoorDash has come a long way if you guys have read this far. This journey of DoorDash further inspires us to investigate the strengths, weaknesses, opportunities, and threats the company faces.
A SWOT template of DoorDash will shed light on some of the internal and external factors that affect the food delivery company.
Every organization has unique factors that keep it floating in the rough sea of competition. Strengths account for those factors that provide a competitive edge to the company and help it in maximizing its market share.
Market Leader in the US
Every company dreams of having the maximum share in the market, but only some manage to get there. DoorDash has emerged as a market leader in the food ordering industry by capturing 59% of the market share by March 2022.
DoorDash proved to be a nightmare for its competitors in the US. Where DoorDash has obtained 59% of the market share alone, all its competitors have managed to grab the remaining 41%. Such dominance is actually a very potent strength for DoorDash.
Expanding operations internationally provides great strength to a company since exploring new markets increases the company’s annual revenue and increases a company’s popularity.
DoorDash is currently operating in four different international markets. This global expansion policy provided strength to the company’s position by diversifying its revenue streams compared to operating in a single market.
Every business tries to develop some attractive-looking offers to increase its customer base, but at times it doesn’t work out. However, if we look at the marketing strategy of DoorDash, it seems pretty successful.
DoorDash introduced DashPasses, through which customers wouldn’t have to pay a single penny for any order over $12. Naturally, this offer attracted a lot of people; as a result, the number of “Dashpass” subscribers reached 5 million in a short time. Having such a powerful marketing strategy can take DoorDash to places.
User-Friendly Online Platforms
For a second, think of yourself as a hungry person but unable to order food due to the complicated structure of online platforms; trust me, you won’t like it.
DoorDash has provided a solution to this problem by introducing a user-friendly website and mobile app where customers can place their orders quickly.
Where companies have strengths, they also have weaknesses. Conversely, factors due to which companies underperform are considered as its weakness. To succeed, companies have to accept their shortcomings and try to convert them into their strengths.
Limited International Presence
As we discussed earlier, companies need to have an international presence. Although DoorDash is present internationally to some extent, still having operations in only four countries is not enough.
DoorDash had the potential to dominate international markets the way it dominates the US market, but due to the delayed expansion policy, DoorDash missed out on the opportunity to capture other potential markets to increase its revenue.
High Delivery Costs
What’s the first thing they look at whenever people order food through food delivering companies? Correct! They look at the extra money they’ll have to pay to get the food. So consumers have this natural instinct to avail the comparatively cheaper option.
Although DoorDash is a market leader, having a high market share, it is certainly not the cheapest food delivering company out there. Other companies present in the market offer their services at a lower rate than DoorDash.
Costly Commission Structure
Back in 2013, the idea of a food delivery company was initiated to solve restaurant owners’ delivery-related problems. However, as the company got operational, it had to divide the costs between consumers and restaurant owners.
To do that, DoorDash came up with three types of commission plans for restaurants, starting from 15% and increasing up to 30%. Since restaurants find this commission structure costly, they might switch to some other alternatives.
Although DoorDash is a big success in the food delivery industry, it is also true that it lacks business experience. Since DoorDash has been functional for less than a decade, it means that it has very limited business experience.
This limited business experience can be somewhat daunting in the future since companies require significant experience to survive in their respective industries.
Opportunities are the chances present for a company to get big by increasing its revenue and market share. The letter O in the word “SWOT” represents the opportunities present for a company to grow.
This section will discuss some of the opportunities that lie ahead of DoorDash that can help it attain further growth.
DoorDash is considered among the few companies that come up with very unique business plans. After working as a food delivery company for years, DoorDash got an idea to diversify its portfolio a bit, and as a result, the concept of DashMarts came into being.
Keeping its uniqueness intact, DoorDash established virtual marts called DashMarts that have groceries, snacks, and food items from different restaurants. Currently, this service is only provided in eight cities in the US, but it has the potential to grow and generate revenues from markets across the globe.
Expansion is considered the primary strategy to increase revenues. Looking at the current operations of DoorDash, we can clearly conclude that DoorDash has a lot of unexplored potential for expansion.
DoorDash only provides its food delivery services in Australia, America, Canada, and Japan. However, it has the opportunity to initiate operations in new developing markets such as India and China, which could help DoorDash financially and strategically.
Mergers and Acquisitions
Every company considers its competitors as its biggest threat but is it possible to decrease the number of competitors in the market? Absolutely.
Mergers and acquisitions help big businesses to buy small competitors; this increases the market share of big companies now they have less competition left in the market. DoorDash can adopt a similar strategy to ensure its dominance in the market.
Threats can be considered factors that can adversely affect a company’s growth. Threats are the external factors that put pressure on a company to limit its operations.
We have discussed the Strengths, weaknesses, and opportunities that DoorDash has. Now let’s look at some of the threats that DoorDash faces.
DoorDash has to step up its game and look into the future.
A few years later, consumers will expect a seamless ordering experience and a quality product on the first try. DoorDash should invest in tech development to provide relevant data for managers to make more informed decisions about customer retention and growth to overshadow its competitors.
Increase in Oil Prices
Due to the recent political tension between Russia and Ukraine, a significant increase in oil prices is observed globally. An increase in the oil prices would increase the cost of operations of DoorDash.
To compensate for the high oil prices and keep the business running, DoorDash might have to cut off its delivery fee. However, this will cause a fall in DoorDash’s turnover, and the company will suffer financially.
An economic recession can have a terrible effect on DoorDash’s operations. A recession is known for lowering the living standards of people. In an economic downturn, uncertainty prevails, pushing people to save.
So if an economic recession arrives, a decline in the orders would be observed. This could be perceived as a threat since a decrease in orders would cause the revenue of DoorDash to shrink.
In this article, we told you about one of the top food ordering companies, DoorDash. We discussed how it came into being and how it is performing currently.
Then we conducted a SWOT analysis of DoorDash to get an insight into the company. Through SWOT analysis, we discussed some of the strengths, weaknesses, opportunities, and threats that DoorDash faces.
If you guys have reached this far, we are sure that now you know the internal and external factors that affect the operations of DoorDash. Along with providing you the information about DoorDash, this article has also taught you how to conduct a SWOT analysis.
The factors highlighted in this SWOT analysis can also be represented more efficiently through a SWOT Matrix.
In the end, we would assume that you enjoyed reading about one of your favorite food ordering companies. Besides getting all the information about DoorDash and its operations now, you’re also aware of how SWOT analysis is done. SWOT analysis is an efficient tool to investigate an organization’s internal and external factors. To learn more about SWOT analysis, you should go through some more examples of SWOT analysis.