Global capitalism has a lot of aspects that still remain a mystery to common people. However, that doesn’t mean we cannot enjoy the collapse of the system, and that too in the most hilarious manner possible. Now if you are familiar with the food and taxi delivery services, you know that these companies operate with a margin profit system. To put it simply, when you order via a third party, you get a discount that the service then has to pay to the company making these products.
However, in some cases, the delivery services make more than the actual restaurants and cab services. We have an example of how a pizza place trolled a delivery service by playing with the margin profit that the service was offering to the customers, without informing the restaurant.
A content strategist and writer working at The Margins, Ranjan Roy wrote a hilarious account of one of his friends who owns a few pizza restaurants. Now his friend’s place does not offer delivery services but the website suddenly started getting negative reviews about late orders. “He realized that a delivery option had mysteriously appeared on their company’s Google Listing. The delivery option was created by Doordash,” Roy wrote.
So this is one of the tactics employed by DoorDash to increase engagement with the customers. They bully the restaurants when they get bad ratings and then demand discounts from them. However, lucky for Roy’s friend, DoorDash had mentioned the incorrect prices on the site and this gave them the brilliant idea of conning the bully. “My third thought: Cue the Wall Street trader in me…..ARBITRAGE!!!!”, said the pizza place owner.
“If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You’d net a clean $8 profit per pizza [insert nerdy economics joke about there is such a thing as a free lunch],” wrote Roy.
They ended up ordering 10 pizzas by using this method and DoorDash didn’t even realize that they were going to the same address multiple times. This resulted in a smooth flow of cash that began from $8 to the restaurant’s account on each pizza. So, at the end of the day, Roy’s friend made around $75 profit by just ordering pizzas for the restaurant.
“So over a few weeks, almost to humor me, we did a few of these ‘trades’. I was genuinely curious if Doordash would catch on but they didn’t,” wrote Roy. “Was this a bit shady? Maybe, but fuck Doordash. Note: I did confirm with my friend that he was okay with me writing this, and we both agreed, fuck Doordash.”
Roy later pointed out in his article that DoorDash has been in a loss since last year. The service filtered almost $450 million after making $900 million in revenue.
“You have insanely large pools of capital creating an incredibly inefficient money-losing business model,” he writes. “It’s used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?”
Basically, if you do not bring competition to the service market today, your business model is bound to collapse. At least, this is what capitalism has taught us. Uber and other cab services right now are suffering great losses and if the pandemic doesn’t go away soon, the companies might be forced to sit down.
The alarming part to take from Roy’s story is that customers are not going to wait for their favorite business model to get back on their feet. If a service goes into loss, no one would waste time in returning to old fashioned methods of directly ordering from the restaurants or calling the taxi without a third party service.
Yes, it might be difficult to go back to hailing a cab or picking up your own food but smartphones and WiFi connections mean that it is not going to be as difficult as it used to be.