DoorDash’s Andy Fang on international growth and post-pandemic deployment
DoorDash, which went public in December, has undoubtedly benefited from grocery delivery trends over the past year. The company’s stock began trading at $ 182 per share on December 9, 2020, and although there has been an up and down since then, stocks are up about 24%.
Building on this momentum, the two-time company CNBC Disruptor 50 is getting into alcohol delivery – not to mention its plethora of international expansion plans. At the center of these plans is co-founder and CTO Andy Fang, who leads the engineering team and is responsible for the overall product vision, technology roadmap, and architectural direction of the DoorDash platform. Andy holds a BS in Computer Science from Stanford University, where he met co-founders Tony Xu and Stanley Tang and the concept for DoorDash was born.
CNBC recently spoke to Fang, who says groceries, convenience, liquor, flowers and gifts are paramount to the company’s platform offering, while international opportunities abound.
The following questions and answers have been edited for length and clarity.
CNBC: What consumer behavior will persist as we venture into a post-pandemic world? Are people ordering more than they did before the pandemic?
Fang: Yes, there are more consumers than ever before who use DoorDash and order more deliveries than before Covid-19 – but above all, they continue to order at higher rates, even given the reopenings. We have continued to set new records for orders on our platform and for order values on our marketplace, as the order rates for new and existing customers continue to exceed the pre-Covid average. This also means that we have been able to offer dealers and dashers more economic opportunities.
We know consumer behavior is sticky. Recent studies show that the majority of consumers plan to continue getting as much restaurant food delivery as they did, or even more, once the pandemic subsides. Beyond restaurants, however, we see our continued expansion into new industries as one of the main drivers of consumer engagement. Orders from non-restaurant categories, including groceries, convenience, alcohol, flowers, and gifts, rose 40% from late 2020 to the end of the first quarter of 2021. In addition, new and improved components of the DoorDash product – such as DashPass, our subscription service, and DoubleDash, our offer to bundle items from more than one retailer – continue to offer consumers even more choice and convenience.
CNBC: I know DoorDash recently launched in Japan and it’s rumored to be eyeing Europe next – How does third-party delivery abroad compare to what is available in the US?
Fang: Our mission at DoorDash is to empower the local economy, and while we started in the US, we always had the intent to expand our influence and add value to dealers, consumers and dashboards in other countries.
At the international level, just like in the US, we’ve seen a great opportunity to provide retailers with new tools and products that will help them increase their sales. At the start of the pandemic, over 40% of merchants did not have an online channel to reach customers and we know that increasing online sales is now more critical than ever for these businesses.
From setting up an online store for direct order, pickup and delivery to providing white label delivery, we know that by introducing more merchants to the services we offer, we are helping their businesses and enriching neighborhoods around the world can. The opportunities presented to us are enormous, and while we delve deep into the unique needs of each new country, we continue to be excited about the impact we can make for our stakeholders there.
CNBC: Can you tell me more about the early DoorDash days? Were there difficult times where you felt the company wasn’t going to be successful?
Fang: Every industry goes through ups and downs, but I think this is especially true for last mile logistics and on-demand delivery rooms. When we founded DoorDash for the first time in 2013, the investor community was enthusiastic. A few years later, around 2016/2017, many investors started asking if any players in this area could become profitable. As a result, we struggled to raise capital and eventually resulted in a downward round. Since we were less well funded than our competitors, we had to be very disciplined in allocating capital while trying to grow as a company. Fortunately, this challenging time forced us to reinvent the way we work and be more adept than ever.
Many of DoorDash’s executives today were with the company during that time and retain the same pragmatic determination that got us through then. Experiencing these lows made us a sharper and more combative team. The focused, detail-oriented judgment that we relied on back then to be successful has become part of DoorDash’s DNA while also enabling us to better address the challenges that emerged (and will come) after that master.
CNBC: Now that you’ve led the development of DoorDash’s logistics network in the US, can you speak more about this process and your thoughts on scaling this logistics network in new markets?
Fang: Building the DoorDash logistics network was an extensive effort and is now a continuous effort across our company. On the one hand, grasping all sorts of details about the physical world is really an exercise – where are the open parking lots on Main Street? How long does it take to bake a pizza? How long does a pint of ice cream stay cold? – and at the same time balance the dynamics of a three-sided marketplace.
As we continue to grow, let’s think about how we can maintain flexibility and meaningful earning opportunities for Dasher, continue to provide merchants with as much coverage as possible, and always ensure that consumers receive their orders efficiently. Balancing these priorities is an interesting challenge, and things only get more complex when we consider different regions, vehicle types and societal norms. The logistical considerations for a densely populated city like Chicago or New York are different from those for a suburb like Palo Alto, California, where we started. And in Japan, where most dasher deliver by bike instead of car, we may suggest other delivery routes or offer different bags for transporting goods to their final destination.
Additionally, we also know that consumer expectations have changed over the past eight years since we were founded, and that people generally want faster access to more things. That expectation has only grown during the pandemic as more and more people take advantage of the benefits and convenience of on-demand delivery and collection.
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