5 Strategies That Helped DoorDash Win 59 Percent Market Share

Tell a compelling origin story, win the battle for customer value, improve operations each day, work with customers monthly, and dream big but start small.

The global economy goes through cycles of expansion and contraction, and there is not much that business leaders can do to control them. For example, in the past few years the economy has gone through massive mood swings.

Here’s how:

  • Crash. In early 2020, business leaders cut staff in anticipation of a pandemic-driven plunge in demand.
  • Boom. For most of 2021, business boomed as people working from home spent money on renovations, furniture, electronics, and food delivery services.
  • Switch. In 2022, inflation soared, the Fed raised interest rates, and consumers spent on the basics — like food and gasoline — and put what was left over into restaurants and travel.

To survive such fluctuations, companies should provide their customers with more value than their competitors do. When times are good, they will gain market share. And when demand drops, they can win over their weaker rivals’ customers.

Food delivery service DoorDash does this. As I wrote last December, in November 2021, DoorDash’s U.S. food delivery market share was 57 percent — rising to 59 percent this May (second place Uber Eats’ market share was 27 percent).

How did DoorDash do this? Its culture drives the way it operates — making merchants more profitable, consumers more satisfied, and delivery people better off than do competing platforms.

Here are five strategies that enabled DoorDash to prevail in the food delivery market and what business leaders should do about them.

1. Tell a compelling origin story.

I think business leaders should tell a story that makes the world understand what they care about and how their values motivated them to start their company. Such a compelling origin story helps leaders attract and motivate employees and win customers.

DoorDash’s culture draws from what matters to its CEO, Tony Xu, whose mother was a doctor in China. When his parents came to the U.S., she wanted to but could not practice her profession.

But hers was a dream delayed. She worked three jobs for 12 years to support the family — including as a server in a restaurant. Ultimately, she returned to school and opened a medical clinic that she has been operating for more than 20 years, according to Xu.

This story helps explain DoorDash’s mission of empowering the underdog. As Xu wrote in DoorDash’s prospectus, “DoorDash exists today to empower those like my mom who came here with a dream to make it on their own. Fighting for the underdog is part of who I am and what we stand for as a company. I am humbled by [our customers’] relentless drive to create and build, and their contribution to their communities.”

2. Give consumers what they want, rather than replicating competitor strategies. 

Some business leaders make the mistake of homing in on a competitor and trying to copy its strategy. DoorDash takes a different approach — going the extra mile to give customers what they want.

DoorDash makes short-term sacrifices to preserve its reputation for customer excellence. In its third month of operation, DoorDash experienced an outage. Xu saw this as an opportunity to demonstrate how much he cared about customer satisfaction, so the company gave refunds to all consumers, costing “a double digit percentage of our bank account,” he wrote in the prospectus.

Business leaders who follow this strategy can turn customer service interruptions into opportunities to brand themselves as customer value creators.

3. Aim to improve operations 1 percent every day.

Business leaders should make customers better off by enhancing the operations that affect their experience with the company’s products and services. DoorDash does this by maintaining daily pressure to improve in measurable ways — such as reducing delivery times, increasing efficiency, or boosting personalization.

4. Maintain direct consumer contact.

Business leadership teams should spend time every month in direct contact with their customers. Direct customer contact helps business leaders identify new products and ways to improve service that keep customers coming back for more.

To that end, Xu and other DoorDash executives take a day a month to “do a delivery or engage in customer support, menu creation, or merchant support.” DoorDash believes this contributes to its “category-leading spend retention and capital efficiency,” according to its prospectus.

5. Dream big, start small.

Business leaders should invest in new products to sustain their growth. As I wrote in Scaling Your Startup, before taking on new capital to scale such services, companies should perfect the execution of a new service so it becomes more efficient with scale.

DoorDash follows this approach — it “begins projects in one market, with a lean team, and with very little capital and asks them to earn their way toward increasing investment,” according to its prospectus.

Follow these five strategies and your company has a much better chance of becoming an industry leader through economic cycles.

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