DoorDash is one of the company’s operating in the online food delivery industry. The business operates in US, and is deemed as the leading food delivery service, holding more than 60% market share. The PESTLE Analysis of DoorDash provides overview of the different factors in the external environment and their subsequent impact on the organization’s operate.
Political Factors
With international acquisitions and global operations, the risk of geopolitical uncertainty increases. DoorDash has acquired Wolt to increase its global reach, which has added to the level of risk for the company in case of changing political stability. For example, the turmoil in Kazakhstan has negatively affected the operations of the business (DoorDash Inc, 2023).
Another political change that had adverse impact on the smooth operations of DoorDash was the Russian war and the sanctions on the region. Even though the business was not present in Russia, but it was in close proximity to the crisis centered region, which had an impact on the level of uncertainty. Due to safety concerns, the operations had to be put on hold.
The trading policies adopted by a government also constitute an integral part of the political environment for the company. Factors such export controls and trading sanctions have a profound effect on the company. Moreover, the tax regulations implemented by the government constitute a part of the political factors as these decisions effect business sales and income.
Economic Factors
There are different economic factors that affect the buying power of the consumers, which can ultimately influence a business ability to achieve high revenues. Economic stability and low rate of inflation is reflected into favorable consumer behavior, while increasing prices induce financial pressure and dampen market growth chances.
Economic disruption in the form of inflation creates financial pressure on the businesses as the management has to maintain balance between expenditure and profitability. Price adjustment and other strategies are required to respond to inflationary pressure. The goal is to maintain sales despite the higher prices of goods and fuel cost.DoorDash has been able to maintain its profitable position even when inflation had caused disturbance for other delivery services. The subscription service Dashpass has been helpful in keeping the cost low for the customers, specifically the loyal target market that continued using the platform despite inflation (Lee, 2022).
Apart from these factors, unemployment, income tax and consumer debt also play an important role in shaping the behavior of people using online food delivery apps. If unemployment is high, people are not likely to spend money on using such platforms, while stable employment and favorable financial position of the consumers drives business growth due to customer spending.
Social Factors
Growing population suggests that there is an increase in the customer base for the company. Furthermore, the preference of customers and merchants shapes the range of products and service design being provided to the people. DoorDash has to adapt its policies with the changing preferences of its key stakeholders to remain profitable in the industry.
Covid-19 has brought significant changes to the way businesses were managing their operations due to social distancing guidelines and lockdowns. Organizations have suffered loss of business during the lockdown. However, DoorDash has been able to gain benefit from the changed social dynamics instigated by the pandemic, as evident from its high sales.
Pandemic has created a trend of making online purchases and in-store visits declined, while online orders increased. The food delivery segment has particularly been positively influenced by this change in consumer’s preference for online shopping. DoorDash has been able to take leverage of the consumer and merchants need for online delivery effectively (Wilhelm, 2020).
Technological Factors
The rise of e-commerce supported by the development of technology, in the form of digital order placement and payment options has significantly helped the online food delivery sector. The company needs to have a sound technology infrastructure that supports its operations. Moreover, maintaining the technology and upgrading it is also essential for business success.
The management of online food delivery business through app and website is dependent on strong technological support. DoorDash has access to the up-to-date technology and the company has used various technological tools to create a positive online food delivery experience for its stakeholders.
Artificial Intelligence has been incorporated by various organizations for better management of the business operations. DoorDash has implemented AI as a part of its customer management segment to facilitate the placement of order. This approach is particularly helpful for restaurants during peak hours as it reduces the risk of losing customers due to unanswered calls (Malik, 2023).
Legal Factors
There are various legal requirements that the companies in online food delivery need to be aware of and adhere with. The agreement formed with the workers employed by DoorDash, including the riders that deliver the orders to the customers have to be in compliance to the labor rights and fair treatment. The contract with suppliers and merchants also needs to be aligned with laws (DoorDash Inc, 2023).
The consumer protection laws are also relevant for the online food delivery service providers, as the businesses in this segment have to ensure that the food and service quality is maintained. The food safety regulations are also applicable for DoorDash and failure to follow these regulations can lead to legal issues as well as damage the brand image.
Environmental Factors
The management has taken various steps to improve the degree of sustainability in its business operations. One of the prime focus of the company is on reduction of waste which is achieved through the use of recyclable packaging material, which supported by the partnership with organizations such as DeliverZero.
Moreover, decreasing emissions is also a sustainability related goal for the business. The riders are encouraged to use routes that are optimal in terms of fuel consumption, while order batching further promotes lower emissions. The use of e-bikes is also being encouraged as the company is offering a discounted price to its riders through its collaboration with the e-bike providers (DoorDash, 2023).
Conclusion
DoorDash is influenced by the different factors from the external environment, with each factor shaping the business decisions. The company has been able to respond to the challenges from the external environment and has been able to create a strong market presence, supported by the changing social trends and developing technology.
References
- DoorDash (2023). Environmental Sustainability. Retrieved from https://about.doordash.com/en-us/impact/sustainability
- DoorDash Inc (2023). Form 10-K. DoorDash, Inc. Retrieved from https://d18rn0p25nwr6d.cloudfront.net/CIK-0001792789/6c80c6fa-ff0b-44e3-963b-a6c60669ff56.pdf
- Lee, D. (2022). DoorDash shrugs off inflation worries with record delivery orders. Financial Times. Retrieved from https://www.ft.com/content/49833848-b177-43f6-81c2-c9d6bb120d15
- Malik, A. (2023). DoorDash launches AI-powered voice ordering technology for restaurants. Tech Crunch. Retrieved from https://techcrunch.com/2023/08/28/doordash-launches-ai-powered-voice-ordering-technology-for-restaurants/#:~:text=With%20this%20new%20system%2C%20DoorDash,focus%20on%20in%2Dstore%20customers
- Wilhelm, A. (2020). How COVID-19 accelerated DoorDash’s business. Tech Crunch. Retrieved from https://techcrunch.com/2020/11/13/how-covid-19-accelerated-doordashs-business/