DoorDash boasts of three virtuous cycles the local logistics platform benefits from: local network effects, economies of scale and increasing brand infinity. On the one hand, it's easy to concede that these flywheels do generate accumulating advantages with scale. However, relative to some other "aggregators" we've looked at, we view some of DoorDash's flywheel advantages as more fragile.

As Ben Thompson suggested, DoorDash's local network effects are more a product its success in aggregating merchant selection in suburban markets, vastly improving customer experience by providing access to a diverse selection more similar to an urban market. In an urban market, the selection is less critical to a consumer than price or convenience or more existential factors like guilt or loyalty. In suburban market, where pick up is perhaps a lower lift (less traffic, more accessible by car, etc.) there is room for competitors to undercut merchant pricing for digital ordering sans delivery logistics.

Higher order volume does generate some economies of scale for the logistical platform. More frequent orders create more efficient and profitable courier opportunities, attracting more dashers. However, the nature of delivering food, whereby orders must be delivered in a timely matter at a desired temperature, caps the network effects compared to other marketplaces. DoorDash will look to adjacent verticals with less fickle delivery profiles and will surely benefit from its existing logistics infrastructure for its original high density, high frequency network; however, increased competition awaits.

Increased brand affinity is generally a weaker flywheel advantage (unless your brand attracts rabid enthusiasts, like Peloton, for example). Given the general disfavor DoorDash has generated with two of its three stakeholders (restaurants and dashers), we're particularly skeptical of its potential in this case.

THE SPOT:

167 Raw

THE CITY:

Charleston, SC

Oysters, crudos, and fresh fish in a decidedly cool atmosphere. Reminded us of Clamato in Paris in all the best ways.

https://167raw.com/charleston/

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS

RELATED NAPKINS