DoorDash managed to become market leader in the food delivery industry, claiming 45% market share in the US and taking over giant competitors, such as Uber Eats and GrubHub.

The company certainly has a strong strategy, projecting strong growth for 2022 as well, with an order volume of $48b-$50b, meant to be achieved through vertical expansion of services offered and through regional expansion.

This entry will analyze DoorDash main bold moves, aiming to collect them into a strategic framework: the Blue Ocean Strategy, focusing on the Create-Raise-Reduce-Eliminate Grid applied on the main competing factors in the industry.

One of the industries which took off in full force since the pandemic is the food delivery industry, and delivery in general, such as groceries, flowers, etc., trend marked by super apps especially in Asia, such as Grab.

The space saw dynamics during the last years with Uber entering aggressively the space as an extension to its ground transportation / ride hailing offering and as a means for risk mitigation against the headwinds brought by the pandemic.

However, as usually this being the case with all sorts of crisis, there are also potential advantageous merger & acquisitions possible in such times, which brings a consolidation of the industry in the mid of a fragmented space that is overly competitive. 2021 brought such consolidation of big players, such as and JustEat Takeaway.com + Grubhub and Uber + Postmates.

M&As are for sure an accelerated path to profitability, worthwhile to consider for companies who have the necessary leeway to invest in such initiatives.

Let us analyze the industry's landscape through the lens of the Porter's 5 Forces Framework, depicted on the left hand side.

Bargaining Power of Suppliers

The power level: LOW.

Suppliers are two categories here:

• the tech platform, mostly developed in house, possibly with some outsourcing

• the riders themselves, which, depending on country specific regulations, are either employees or suppliers as such.

Their lack of specialization and overall availability makes their bargaining power low as their services are treated as a commodity.

Bargaining Power of Buyers

The power level for B2C: HIGH.

The power level for B2B: LOW.

Buyers are two categories here:

• B2C - the customers themselves who order food for delivery, who are demanding a great quality at a lower price and do not have to deal with any switching cost from one food delivery company to another. The reason for the low price is the overall lack of differentiation for the service in the industry.

• B2B - restaurants and bars, buying the food delivery service from food delivery companies so that there products are delivered to the final customers, using them as distribution channels. Their bargaining power is low due to the fact that in general they are not loyal to any of delivery companies, but would work with all of them so that they maximize their coverage and maintain a continuous customer acquisition stream. There is though a clear advantage here in terms of the quality of service to the end consumer in terms of their value perception in case the food delivery company, situated in the "new developers" category, takes the responsibility to pick up the food and deliver it faster and offering monitoring tech as where the rider is on the map towards the destination, at any given moment. The food delivery companies which choose not to provide this service are called "aggregators" and they would rely on a 3rd party to deliver it. The downside of the "new developer" category is the higher price for the delivery, which, in most cases, is not considered by the end customer. Here it pays off to segment the audience properly and in a detailed manner, choosing the right delivery service for the right niche, therefore some companies go rather for a hybrid delivery model.

A problem for food delivery companies is retention linked to loyalty and the profitability game in general, due to the lack of differentiation in the market which would push the gross profit margin lower since a mechanism for retention is to offer discounts continuously or very often.

Industry Rivalry

Major competitors in this space, with different regional strengths, are: DoorDash, Delivery Hero SE, Uber Eats, Deliveroo, GrubHub OLO, Inc, Snapfinger, Inc., Tillster, Inc, etc.

Merger & Acquisitions are certainly a quick way to expand and to accelerate the path towards profitability, if one has the necessary financial means to do it, other new entrants being either bought or forced to leave the market, unless they are capable to disrupt the market in a major way.

Threat of New Entrants

It is lower now, especially due to consolidation, but still dominated by big players due to the fact that profit margins are low and a new entrant, although with a relatively low barrier to entry in this market, would need to be able to wait until profits are registered. The fact that the initial capital required to start a new business in this industry is not high, it does not help either due to the low profit margin expected.

Threat of Substitutes

It is low in general since the alternative is for the restaurants to deliver the food by themselves. Some restaurants do it, but the trend is on the decline, as most of the time, restaurants lack expertise to organize the delivery service at a larger scale.