6 Novel Ways to Optimize DoorDash Food Delivery Tipping through Web3 Technologies 

TL;DR

• New Tipping Mechanism: DoorDash has introduced a new tipping approach resembling a bidding system, where higher upfront tips lead to faster delivery, potentially benefiting drivers but may drive away price-sensitive customers over time.
• Web3 Technology Adoption: Utilizing Web3 technologies such as blockchain and smart contracts can provide a decentralized, transparent, and cost-effective solution to manage tips, potentially solving the problem of conflicting objectives between stakeholders like customers, drivers, and restaurants.
• Six Innovative Strategies: The article suggests six strategies including Restaurant-Backed Bidding, Tip Escrow System, and Time-Sensitive Tipping, which, when enabled by Web3 technologies, could optimize the tipping system for long-term mutual benefits, and possibly introduce new revenue streams like local ad integration or value-added service offerings like ‘Delivery+’ option.

DoorDash has introduced a pop up message warning customers who place a $0 tip that their orders may take longer to get delivered, effectively encouraging higher upfront tips as a way to ensure on-time or faster delivery. 

This new approach resembles a bidding mechanism more than a traditional tip, aiming to speed up delivery for customers who tip more. Those who are familiar with minting NFTs or purchasing meme coins on Uniswap will no doubt draw parallels with Ethereum's gas fee system, where higher fees lead to quicker transaction processing. This approach of auctioning for one's right to get theri transaction confirmed first often leads to 'bidding wars', making the service unaffordable for some customers. 

Although pre-tipping for faster delivery would be beneficial for delivery drivers initially, this approach might deter customers in the long run, leading them to cheaper alternatives, and ultimately shrinking the customer base, negating the initial earnings increase for drivers. 

This approach may also adversely affect restaurants in low-income areas, as their orders might get delayed due to lower tips.

#Employing Web3 Technologies

Web3 technologies offer a decentralized approach to the internet encompassing blockchain, smart contracts, and digital wallets. These tools ensure greater transparency, lower operating cost due to shared infrastructure, and seamless operations with the help of automated transactions. 

Most importantly, these tools, supported by the application of economic and game theoretical principles, allow companies to solve complex coordination problems between stakeholders with often conflicting objectives. For example, here are the list of stakeholders most impacted by DoorDash’s tipping process and their primary objectives: 

• Customers: Seek a fast, reliable, and affordable food delivery service.

• Delivery Drivers (Dashers): Aim to maximize their earnings and work in flexible schedules.

• Restaurants: Look to increase their sales, reach a wider customer base, and maintain a good reputation through DoorDash.

• DoorDash Inc.: Strives to grow its market share, maintain a strong brand reputation, and achieve long-term profitability.

• Local Communities: Seek positive economic impact and community engagement from DoorDash’s operations.

• Technology Partners: Aim to maintain a mutually beneficial relationship with DoorDash by providing necessary tech support and innovations.

The potential conflicts are apparent in the primary objectives of each stakeholder. For example, delivery drivers want to maximize earnings, yet customers want affordable delivery. Both restaurants and Doordash want to increase sales and profitability, yet encouraging customers to tip for faster service conflicts with customers’ desire for faster, reliable and affordable food delivery services.  

Given this complex dynamic, we suggest six alternative ways that DoorDash can optimize its food delivery tipping system to ensure long term mutual benefits for all stakeholders:

#1. Restaurant-Backed Bidding 

Allow restaurants to bid for faster deliveries on behalf of customers, with customers setting a maximum tip amount. Any tip amount beyond this would be covered by the restaurant, ensuring quality service while mitigating the market-driven tipping drawbacks

#2. Tip Escrow System 

Utilize smart contracts to hold tips until the delivery is confirmed and meets the expectations, with the tip amount being adjustable based on the delivery distance.

#3. Time-Sensitive Tipping 

Customers can deposit their maximum tip amount in a time-locked smart contract, with the tip decreasing by a specified percentage every 5 minutes if the driver is late, promoting on-time deliveries.   

#4. Tip Splitting 

Enable customers to distribute tips among all parties involved in the order process - the driver, restaurant, DoorDash, and even the chef. This way, customers can incentivize the aspects they value most, like faster delivery, extra food, or personalized recommendations.  

#5. Local Advertisement Integration

Allow local businesses to bid for attaching printed ads to the food delivery, redirecting a part of the ad revenue to subsidize driver tips and base pay, creating an additional revenue stream.

#6. ‘Delivery+’ Option 

Offer an upgraded service where drivers perform additional tasks en route, like package or grocery pickup. This could merge, for instance, a DoorDash and an Instacart order if both stops are on the way to the customer's location, adding value to the service and potentially increasing tips for drivers.

These strategies, when implemented via web3 technologies, could bring about a more transparent, fair, and efficient tipping system, while potentially adding new streams of revenue and value-added services to the DoorDash ecosystem.

#Powered by Magic's Wallet-as-a-Service (WaaS)

To learn how Magic's Wallet-as-a-Service (WaaS) can facilitate the web3 use cases described in this article, visit https://magic.link/enterprise and book a demo.