DoorDash to expand into Auckland a year after market entry
Tuesday, 23 May 2023
US food delivery giant DoorDash is gearing up to expand into the country’s largest market, following a year of quietly developing its operating model in Wellington and Christchurch.
DoorDash will launch in Auckland in July, facilitating the home delivery of food similarly to the likes of UberEats, Delivereasy and Menulog.
The NYSE-listed company first entered the New Zealand market in June 2022 through Wellington, and says its New Zealand launch has been its most successful yet.
DoorDash New Zealand and Australia general manager Rebecca Burrows said the company put that down to building a local team and getting to know the market prior to launching services.
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“We had very strong uptake very quickly,” said Burrows.
“We built on that growth and launched Christchurch a couple of months later; also very successful, with a similar strategy of being on the ground, getting to know who are the restaurants that people love and what services people are looking for.”
It has a small team of seven on the ground, based in offices in Wellington and Auckland.
It had experienced roughly 20% growth month-on-month for the past six months.
The San Francisco-based business first launched 10 years ago and claims to hold a 60% share of its largest home market in the United States. It has a market capitalisation of US$25 billion (NZ$39b).
The company has come under fire in recent years for allegedly withholding tips, listing restaurants on its platform without permission and having questionable pricing tactics.
Just this week it was sued for charging iPhones users more than those ordering from Android devices. A case was filed in the US District Court of Maryland, alleging that DoorDash engages in 'deceptive, misleading, and fraudulent practices' by hiding unfair fees behind certain labels.
Burrows would not say how much money DoorDash had generated in the New Zealand market until now, or how many active users it had here, but said it was pleased with its business activity.
DoorDash offers a white-label service, fulfilling delivery of orders for restaurants through their own business websites, and a picking and packing service for its grocery partners, although most of its business locally comes through its marketplace offering.
“By launching in Wellington which is a sizeable enough market for us to make a difference and build something successful, but small enough market to test, learn and interact with merchants, and understand consumer behaviours [here] and understand what works and doesn’t work – it has allowed us to have a more market-empathetic approach,” said San Francisco-based Burrows.
“We are building DoorDash for New Zealand, we’re not doing DoorDash to New Zealand.”
Burrows said the company now “felt ready to take on the biggest market in New Zealand” with some knowledge.
“We know Auckland is a big market for us to build in and to be successful in, so we’re very excited about the Auckland launch – that will give us coverage of more than 50% of the New Zealand population and unlocks a lot of opportunities.”
Other opportunities included launching the delivery of other goods outside of meals. After that it would look to launch into other major cities, Burrows said.
She said DoorDash was working to expand its Auckland team, building its sales, marketing and operations team.
“Right now we have a lot of people coming in from other parts of our business to support the local team but we’re building that out as the business grows, predominantly focused on roles that face into market.”
DoorDash had previously said that with time it planned to hire local software engineers for the platform.
Burrows said the past year had been a “very successful market entry” for DoorDash, and transactions had not been hampered by the economic environment of cost of living pressures.
“We’re not seeing a reduction in overall spend by consumer or in the number of times a consumer uses the platform. In fact, in some types of group of consumers, we’re seeing greater utilisation, they are potentially using food delivery in place of other things.”
Burrows said DoorDash had experienced strong demand and uptake in people wanting to drive for the company. She put this down to the current economic environment and people wanting to supplement their incomes.
DoorDash said it has seen around 10 times order growth since launching in Wellington in May 2022, and around fives times order growth since launching in Christchurch in October 2022.
“We are pleased with how we’ve gone. We don’t enter markets without a fair bit of thought going into it, so our expansion is a signal we’re continuing to invest, and we’re exited by the opportunities in New Zealand.”