Re:DoorDash and pizza arbitrage (2020)
by kelnos on Wednesday July 13, 2022 @04:46PM
(#32088535)
> it's not exactly clear to me what happened to cause the lower price (I would assume 'no fees' just means the price would be the same as at the restaurant, not lower)
I believe I read elsewhere that DoorDash would (in addition to not charging fees) underprice items during their "restaurant acquisition period" as an additional way to inflate sales numbers, so when they go to the restaurant to negotiate a deal, they can say "in the past month we delivered 500 of your pizzas to customers! With your $24 price, that's $12,000!" ... while they conveniently hide that DD themselves only charged $16 per pie, and it doesn't take an economist to understand that more people will buy a product if you reduce its price by a third. Or, more relevantly, fewer people will buy a product if you "increase" its price by 50%.
I believe I read elsewhere that DoorDash would (in addition to not charging fees) underprice items during their "restaurant acquisition period" as an additional way to inflate sales numbers, so when they go to the restaurant to negotiate a deal, they can say "in the past month we delivered 500 of your pizzas to customers! With your $24 price, that's $12,000!" ... while they conveniently hide that DD themselves only charged $16 per pie, and it doesn't take an economist to understand that more people will buy a product if you reduce its price by a third. Or, more relevantly, fewer people will buy a product if you "increase" its price by 50%.