Achieving success in food delivery market: How DoorDash was able to get $13B valuation?

Food is one of the most basic needs of mankind. The fact that civilizations started off on the banks of perennial rivers is an explicit indicator of food’s prominence over other resources. While the importance of food has not changed, the perception has transformed considerably.

Food that was once confined to being cooked at home saw the transition to restaurants. Food was once confined to being cooked at homes. However, the demand for mobility made the ubiquitousness of ‘food’ transition from homes to restaurants. Restaurants are no longer a utility-driven business that provides food for people who wouldn’t be able to consume home food. These days, they have become excuses for people to hang out and converse with each other – the ‘food’ has become more of an excuse! These days, the demands of people have raised so much that they desire to avail the restaurant food in the comfort of their homes. This gave rise to a new stream of businesses focusing on food delivery.

DoorDash’s success in Food delivery industry

DoorDash is one such business. It’s a competitor to GrubHub and Uber Eats, and relies on a mobile application to deliver on-demand, location-based services.

DoorDash has been one of the most successful startups in the food delivery domain. The company had tripled its annual sales, with November 2018’s profits alone soaring to $107 million.

What makes the achievement of DoorDash exceedingly commendable is that the company has made itself worthy of the investment amid troubled waters. The ongoing trade war between the United States and China has jeopardized the interests of its competitor GrubHub. The way in which Initial Public Offerings (IPOs) have taken off could only be stated as lukewarm. Postmates, which was intended to go public by February this year, albeit secretly, has not made any progress in that direction. Uber too has not been very successful with its IPO debut in May, with its share prices trading below the initial price.

In the words of the CEO of DoorDash, Tony Xu, what makes their platform successful is the focus; confining themselves to certain geographies. It has established itself as the market leader in the United States and Canada surpassing Uber Eats and GrubHub. DoorDash has also chosen not to wage a price war with its competitors but rather focus on expanding the business that is poised towards making it a billion dollar company.

Following the footsteps of the market leaders, new age entrepreneurs can develop a food delivery app starting with their locality with a ready-made solution like UberEats clone.

DoorDash’s $13 Billion Valuation

The profits in 2018, especially in the final quarter, pushed the valuation of the company to about $7.1 billion in February this year. DoorDash raised $400 million in investments from investors including Sequoia Capital, SoftBank Group’s Vision Fund and Dragoneer Investment Group.

Reliable sources have informed Bloomberg that the company plans on raising another $500 million soon, with a valuation of $13 billion. This move is expected to catapult DoorDash into a stage where it can dwarf its competition.

It is usual to see venture capitalists funding startups and Unicorn. However, DoorDash attracting unprecedented investments inching towards a billion bucks in the first half of the year. This has set incredibly high standards, especially for the food-delivery industry.

What’s the next move?

The next move of DoorDash is eagerly awaited by the customers, pundits, and competitors. There might be speculations on increased marketing spends, competitor-acquisitions, and expansions, but only official statements from DoorDash can be considered valid and legitimate.

Author

Marketing is my soul mate and writing is my side kick. Using my writing skills to share the knowledge of app development and upcoming technologies.