Total Points: 100
Assessment Weightage: 40%
Submission Deadline: On Canvas
General Instructions
- The exam consists of two short articles to be used as one mini case followed by a total of 5 questions. Please use the information provided in the articles to develop your responses. External references are not required. However, if you use external information, please cite using APA style referencing.
- Please refrain from copying information from other sources verbatim as plagiarism checks will be performed on your submissions. UTS has a strong policy against academic misconduct including (but not limited to) plagiarism to ensure high academic integrity.
- Each question / sub-question specifies how many points it is worth and the word limit. Please answer the questions within the word limit. Your response beyond the word limit will not be considered for grading.
- Please begin answering right below each question / sub-question OR ensure that you label your responses with the correct question/sub-question number at the beginning of each response.
Article#1: DoorDash food delivery service launches in Australia
Amid already intense competition and regulatory scrutiny of the food delivery sector, overseas delivery service DoorDash has unveiled its launch into the local market.
The US franchise expressed optimism about its first expansion outside of North America, unveiling its launch in Melbourne on Wednesday (4 September). DoorDash also said that it is “building a corporate team in the Melbourne area”.
“We dove deep into the Australian market and quickly realised two things: restaurants want more from their delivery partners, and not all Melburnians have access to the selection that they should expect,” the company’s Australian general manager, Thomas Stephens, said.
“We’ve built a lot of product and expertise to solve these problems in North America. Combining that experience with a tailored approach just for Melbourne, we’re excited to grow the market here. We’ve built a service for Australian eating habits with a simple focus: provide more access to Melburnians’ favourite foods.”
According to its website, DoorDash already has over 350 restaurants, cafés and take-away food outlets in Melbourne already registered on its platform, although some of these are likely to double up in multiple food categories.
A variety of independents are joined by certain locations of well-known chains, including Pizza Hut, TGI Friday’s and Muffin Break.
DoorDash also claims to have an exclusive partnership with Il Gusto and Cedar Bakery.
In addition to deliveries, DoorDash said that it will offer a pick-up option for users to collect their food “on the go” while also offering group orders.
“Working collaboratively with restaurant owners of all business sizes, customers and Dashers, our priority is accessibility to a delightful food delivery experience for all,” Mr Stephens said.
“From Melbourne, we aim to continue our expansion efforts throughout Victoria and Australia through the remainder of 2019 and into 2020.”
Nando’s CEO, Craig Mason, was quoted in the DoorDash launch announcement as saying that his company had joined the platform “to offer our customers even more flexibility”.
Meanwhile, Gary Mink, owner of Bay City Burrito, was quoted as saying that “it has been refreshing working with the team at DoorDash, who have taken the time to understand my business and set me up for success on their platform to get incremental orders from both their delivery and pick-up product”.
Already operating in Australia are food delivery providers including Uber Eats, Menulog and Deliveroo, as well as smaller providers and those servicing particular niches, such as those specialising in pick-up orders or the corporate market. And in recent months, service station giant BP announced a partnership with Uber Eats to offer deliveries of its convenience snacks and pantry items, under a new service called Couchfood.
Meanwhile, German-founded Foodora announced in August last year that it would abandon Australia in favour of “higher growth markets” overseas.
The launch follows scrutiny of the gig economy, and in particular food delivery operators, amid regulatory concerns about whether drivers are employees or contractors, and also disquiet on their contract terms to delivery drivers/riders.
Regulatory intervention has already seen Uber Eats amend its contracts over fairness concerns, while being cleared by the Fair Work Ombudsman (FWO) over the employee versus contractor debate.
The FWO in June this year abandoned legal action it had launched against Foodora, citing its exit from the local market and the sale of its local assets, which it said “resulted in more than 1,000 Foodora delivery workers receiving only 31 per cent of the entitlements owing to them, including the three workers subject to the FWO’s legal action”.
Article#2: Food delivery giant DoorDash launching in Australia to take on Uber Eats and Deliveroo
Food delivery giant DoorDash is set to launch in Australia next week, creating competition for incumbents Uber Eats and Deliveroo.
Founded in 2013, DoorDash is one of the most popular food delivery services in the United States. In May it raised $US600 million ($888 million), valuing the start-up at $US12.6 billion ($18.6 billion).
The start-up’s move into the Australian market has been flagged by advertisements posted on LinkedIn for 12 DoorDash roles in Melbourne, ranging from general manager to recruiter and head of business development.
The advertisement for general manager states “this person will lead DoorDash’s business in Australia, and will be responsible for our overall success in the market”.
The food delivery start-up has also established a Facebook page in Australia that advertises for driver hire as well as an Australian website that is focused on attracting restaurants to sign up.
A spokesperson for DoorDash in Australia would not confirm the launch but said the start-up is always thinking about extending its mission of “empowering local economies”.
“We’re continually assessing new opportunities to achieve that mission, and don’t have any news to share at this time,” the spokesperson said.
Online food delivery in Australia is a lucrative market, valued at $1.3 billion for 2019 according to Deloitte’s “Future of Food” report. However, it is also highly competitive, with food delivery company Foodora collapsing last year.
DoorDash’s entry into Australia is likely to attract scrutiny from labour advocates after a New York Times report into DoorDash in the United States revealed the start-up took tips intended for delivery drivers or “dashers” and used it for their base pay.
I think it will be difficult for DoorDash to get traction and recognition.
Ken Burgin, Profitable Hospitality
Chief executive and co-founder, Tony Xu, confirmed last month DoorDash would change its payment model.
“We thought we were doing the right thing by making dashers whole when a customer left no tip,” he wrote on Twitter. “What we missed was that some customers who *did* tip would feel like their tip did not matter.”
DoorDash now pays delivery drivers from $US2 per delivery and Mr Xu said any tip goes to drivers.
Ken Burgin, founder of hospitality consultancy Profitable Hospitality, said he was surprised DoorDash was entering the “highly saturated” local market.
Doug Williams talks about being a former Deliveroo driver and the hardships that come with the job.
“Why on earth, when there are so many players, would they come to Australia?” he said. “I think it will be difficult for DoorDash to get traction and recognition.”
Mr Burgin said it was unlikely DoorDash would take driver’s tips in Australia.
“I don’t know how much tipping happens here,” he said. “I’d say they have learnt their lesson
there.”
However, Doordash is confident about its prospects in Australia. In the US, for example, DoorDash enjoys about 56% market share in the US food delivery segment, according to some estimates. Despite entering the market almost ten years after its major competitor, GrubHub and having to build scale from scratch, unlike Uber Eats, DoorDash overtook both in 2019 to occupy the leader’s position. Some experts hail Doordash’s ability to build and
impressive local networks of end customers, restaurants, and dashers quickly and leverage the network effects effectively to grow and reduce costs via economies of scale even at geographical cluster-level. For example, While GrubHub’s early entry allowed it a foothold in north-eastern US, DoorDash has quickly expanded to over 50 cities (vs 17 of GrubHub).
DoorDash has more than 50% share of sales in the two biggest Texas metro areas and almost 75% in Bay Area. As the food delivery market is more favorable to local cluster networks vs global clusters, this strategy has worked well for DoorDash. Moreover, to retain restaurants on its platform, DoorDash has also lowered commissions and launched value added services such as Storefront to help restaurants create their own websites to take pick-up and delivery orders. The service also provides restaurants with customer data, which other third-party delivery aggregators do not typically share.
A spokesperson for Uber Eats declined to comment on the likely impact of DoorDash on the Australian market.
The spokesperson said Uber Eats had been “embraced” by Australians during its three years of operation in the country.
“We place a lot of value on establishing long-term relationships with our restaurant partners and we want their businesses to thrive,” the spokesperson said.
Merton Wulfert, managing director of Deliveroo in Australia, also declined to comment directly on DoorDash’s launch.
“Australia is one of our most important markets globally and we have strong ambition for growth,” he said. “We’re proud of our clear differentiation in the market and are focused on offering the widest selection and most reliable service to customers.”
Questions
- (a) DoorDash has grown rapidly in Australia, and now covers more than 80% of all Australian consumers and has more than 25,000 partners on its platform. According to you, what are the three critical factors for Doordash’s success in the Australian market in such a short time and why? (10 points; Max 500 words)
The three critical factors I have identified that have allowed for the successful launch of DoorDash into the Australian market are; the tailored approach to each city, their focus on establishing good relationships with each local restaurant partner and their lowered commissions and value-added services.
(b) What type of innovation is Doordash? Provide justifications from concepts covered in the subject. (10 points; Max 500 words)
Disruptive Innovation (email sent with information on this theory)
- Conduct a competitor analysis for Doordash. How is Doordash’s value proposition different from its competitors? (20 points; Max 800 words)
Included in the email is an example of a value proposition canvas. The competitors are Uber eats, Deliveroo and Menulog
- Describe the business model of Doordash using the 5V’s model. (20 points; Max 800 words)
Value segment
Valuye proposition
Value creation
Value chain
Value capture
- Please describe the marketing strategy of Doordash’s Australia launch using the 4Ps framework and how each of the Ps might contribute to its success. (20 points; Max 800 words)
Promotion
Price
Place (distribution)
Product
- Doordash is planning to launch a new service to deliver pharmacy products to consumers.
- If you are the product manager for this new service, would you recommend that the service be delivered via a new digital platform or leverage Doordash’s existing platform? Why or why not? (10 points; Max 500 words)
Leverage its existing platform…
- If you are the marketing manager for the new service, how would the 4Ps of the new service compare to Doordash’s existing service? Also identify the customer segment you would target for this service. Provide reasons for the same. (10 points; Max 500 words)
Up to you
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