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An impressive master class in competition.
In one move, Uber substantially hindered a big competitor. Let me explain why... 1/
In one move, Uber substantially hindered a big competitor. Let me explain why... 1/
2/ By all measures, DoorDash is winning in food delivery. But, they have a weakness: their unit economics are horrible.
There just isn't enough money in food delivery for their percentage to add up. So, DoorDash had to find a way to make more per order and tips did that.
There just isn't enough money in food delivery for their percentage to add up. So, DoorDash had to find a way to make more per order and tips did that.
3/ Uber wants to diversify into food delivery with UberEats, but it's not their focus and they were late. They might have won a price war but then their own economics would have been ruined.
But they had something DoorDash didn't: other lines of business.
But they had something DoorDash didn't: other lines of business.
4/ The unit economics of UberEats did not have to be the sole driver of the Uber business. As a result, they could prey on DoorDash's biggest weakness by making the entire tip go to the worker.
Then, they execute and wait...
Then, they execute and wait...
5/ Now, there is an uprising of I'll will against DoorDash, who tries to stick with their model. Uber sees their chance and pushes it, showing consumers there is a better model out there.
DoorDash has no choice but to capitulate, damaging their unit economics as a result.
DoorDash has no choice but to capitulate, damaging their unit economics as a result.
6/ I make this out to see like a perfectly planned strategy, but good business only looks like that in hindsight. Great strategies come from focusing on fundamentals, identifying competitive weakness and patience.
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