DoorDash Is Hiking Customer Fees To Pay For a Law It Helped Write (vice.com) 73
An anonymous reader quotes a report from Motherboard: In the months since a coalition of app-based gig companies successfully passed Prop 22 in California, exempting themselves from reclassifying their workers as employees, DoorDash has been silently passing costs onto consumers. The company-funded Yes on Prop 22 campaign claimed that not passing the ballot initiative would result in higher prices for consumers, and in early December, news first broke that gig companies would be charging more anyway to cover the cost of benefits promised in Prop 22 such as a healthcare stipend and a minimum pay guarantee. It's also not clear whether these new benefits warrant price hikes as an October 2019 study by the Berkeley Labor Center of Proposition 22 found that driver pay would come out to $5.64 an hour. Nonetheless, companies in the coalition signaled they'd have to pass costs onto consumers instead of absorbing them into their already unprofitable enterprises.
Now, DoorDash is raising its service fee to 15 percent in California, which according to an in-app description "helps us operate DoorDash & provide a minimum pay guarantee to California Dashers. Service fees are, according to DoorDash, also calibrated by market demand and Motherboard has seen receipts where the service fee jumped as high as 21 percent. A DoorDash spokesperson told Motherboard that the company is raising fee percentages for orders in California to cover Prop 22 and is keeping a close eye on the impact of these various price hikes and fee increases, adjusting them when necessary. It's important to remember, however, that for DoorDash and other companies, that usually means when a policy is affecting the gig economy's schemes to realize previously illegal profits.
Now, DoorDash is raising its service fee to 15 percent in California, which according to an in-app description "helps us operate DoorDash & provide a minimum pay guarantee to California Dashers. Service fees are, according to DoorDash, also calibrated by market demand and Motherboard has seen receipts where the service fee jumped as high as 21 percent. A DoorDash spokesperson told Motherboard that the company is raising fee percentages for orders in California to cover Prop 22 and is keeping a close eye on the impact of these various price hikes and fee increases, adjusting them when necessary. It's important to remember, however, that for DoorDash and other companies, that usually means when a policy is affecting the gig economy's schemes to realize previously illegal profits.
That is not how business works (Score:5, Insightful)
Companies price their products to maximize profits, not to "cover costs".
DoorDash is raising prices because they believe the market will accept the higher price.
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Maybe they meant classifying employees would increase costs even more? I mean, there are new benefits the drivers get that are not free. Unless those costs were already greater than their profits, they would have to increase costs to make the money come from *SOMEWHERE*.. right?
Re:That is not how business works (Score:4, Insightful)
Is door dash even profitable at this point?
They've never had a full year profit. They did have one profitable quarter ($23 million in second quarter of 2020) though.
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they would have to increase costs to make the money come from *SOMEWHERE*.. right?
If they could make more money at the higher price, they would already be doing it.
Companies are usually free to charge whatever they want. They don't need an excuse to justify a price increase.
One way to gauge the expected response to a price increase is to measure "dwell time" on the checkout page. If customers select their items and then quickly click through the checkout process, that indicates they aren't paying much attention to delivery charges. If there is a long pause on the checkout page, they m
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It's funny how people think that businesses exist to simply break even. Businesses are run by people and most people's goal (whether working as an employee or owner) is not to make enough to just barely get by.
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Re:That is not how business works (Score:5, Informative)
Exactly. Sometimes I'm baffled by the way people think about things. Would people also be shocked to know that customers pay a) corporate income taxes and b) tariffs?
Businesses have revenue and expenditures. When expenditures go up and the market allows, prices go up to compensate. Same with increases to minimum wage, etc... The only time they don't go up is when competition or other market forces don't allow it.
Now, I can hear the real genius in the back already "but, but if the market would have borne those hikes why didn't they do it before, derp?". Well, Jimmy, because competition. But when your competition is also hit with the same costs then prices go up - no explicit price-fixing necessary!
Of fucking course costs will go up with prop22, what kind of rabble rousing nonsense is this article title?
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There are two reasons. One of them is a problem, the other isn't.
First reason - if the price cannot rise, it's because
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Embrace the healing power of AND (Score:1)
Companies price their products to maximize profits, not to "cover costs".
When costs rise, you maintain current profits by raising prices to cover costs. Companies do both all the time.
Companies need a certain amount of profit to exist; otherwise they will fold. You also need a certain level of profits to cover unexpected costs, you need to have some kind of cash reserve on hand.
This is all common sense...
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Each will attempt to source the best product at the lowest price
It's not about price so much as it's about value, value of course being in the eye of the beholder. For example, when choosing between two things, one costs $5 each and the other costs $6 each, they'll choose the $6 one if they perceive it to be worth twice as much to either them, their customers, their shareholders, etc.
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DoorDash execs sound quite tasty.
I eat ALL the rich
So what's the problem? (Score:3, Insightful)
Salaries (or what passes as salaries) go up, costs go up, price goes up too.
Or maybe, since it's almost midnight here, I'm too tired and missing something.
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-As it should be.
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Eventually it will hit a 'percentage' that people will decide they won't pay and instead just go get it themselves, and these self-inserting middlemen's entire business model goes down in flames.
-As it should be.
Along with the people that do make money working for DoorDash.
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Or the restaurants will do delivery themselves. Most of them really aren't happy with the delivery services.
Solution: don't use them (Score:2)
Prop 22 was about giving employees choice, not about how much we love these companies. If said companies aren't providing a service you find valuable, stop using them and give the money to someone else.
Re:Solution: don't use them (Score:4, Insightful)
Look, parents don't have to send their children into a coal mine.
Stupid analogy. DoorDash doesn't employ children. The drivers are adults who are capable of making their own decisions.
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The drivers are adults who are capable of making their own decisions.
Do you have any evidence for that? I've met plenty of adults who have made important decisions with bad results, whether from circumstances, misunderstanding, lack of choice, stupidity or a mix.
Helping people is not a bad thing. Politics is deciding where we draw the line.
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Helping people isn't bad. Forcing them to take that help is, as well as being grossly arrogant to believe the state knows better than the individual. I mean, have you seen some of the crap the government gets up to?
I'm all for educational programs; if you believe people are being taken advantage of, by all means let them know. But don't deny them opportunities just because you think it's wrong.
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Helping people is not a bad thing. Politics is deciding where we draw the line.
Helping people is a bad thing if the helping doesn't actually help.
Governments are not better at making life decisions for people that they make for themselves.
Here is a list of US states by income inequality [wikipedia.org]
Blue states have the most inequality, with NY and CA near the bottom. This is the opposite of what would happen if nanny-state government actually worked.
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"Blue states have the most inequality, with NY and CA near the bottom. This is the opposite of what would happen if nanny-state government actually worked."
Why isn't the causality in the other direction? The equality is lowest in the first place so it's made less bad by more distributive economic mechanisms.
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Bless
Your
Heart
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Better for everyone to be equally poor?
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Helping people is not a bad thing. Politics is deciding where we draw the line.
Helping people is a bad thing if the helping doesn't actually help.
Governments are not better at making life decisions for people that they make for themselves.
Meaningless platitudes. Were talking about where to draw the line, so absolutist statements are pretty meaningless, or are you advocating anarchy? Can you really think of no situations where a government was better at making a life decision for someone than they make for themselves?
Here is a list of US states by income inequality [wikipedia.org]
Blue states have the most inequality, with NY and CA near the bottom. This is the opposite of what would happen if nanny-state government actually worked.
If you think being a blue state in the USA equals 'nanny state' you really need to get out more. That's without even getting into the causation/correlation argument.
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Note that unlike what the gig companies wanted you to believe, being an employee in the US doesn't guarantee fixed hours or a fixed number of hours.
Many people don't want fixed hours. They want the flexibility to work when and where they want.
Just because that isn't what you want shouldn't give you the right to shove your choices down their throat.
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Prop 22 was about giving employees choice...
Really?
I had been led to understand that Prop 22, a bill crafted and promoted by these 'gig' companies, was intended to remove employees' rights and protections, notably related to medical and other benefits, minimum rates of pay, and maximum hours worked.
I can see how the last of these might be construed as 'limiting' employee choice but as to the rest I think I must be missing something...
Really seems self-defeating (Score:5, Interesting)
We bought $30 worth of Pizza the other week and ended up paying another $30 in delivery fees as we are 1/4 mile beyond the delivery perimeter done by the store. We won’t bother doing it again; the food is only really worth $30 on a good day. The good news is the delivery service is reliable and predictable, unlike Door Dash. I really can’t see how the value proposition exists for either the restaurant or the customer to continue this way.
Restaurants would do well to pool delivery services based on origin themselves rather than farming it out. The challenge is organizing that delivery pool initially, but it isn’t that hard.
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I don’t think so; restaurants have employees already. Each one of (say) five restaurants provides one driver to the pool to serve (say) three different areas with delivery once every 20-30 minutes, with the extras filling in depending on flow. The restaurants contribute something back to the pool based on a percentage of revenue to be redistributed to make everybody whole.
The key is simply that all restaurants are close together and are willing to work together. Compared to a 20% take off the top,
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What you describe could be a violation of anti-trust law.
There are many rules restricting collusion and cooperation by businesses in the same market.
I would be outraged... (Score:4, Insightful)
If I didn't already refuse to do business with these middleman-leeches, that is. Whenever we order food online (or over the phone), I drive to the restaurant and pick it up myself. Easy-peasy.
It's not as if any of these places is very far away from my home.
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Re: I would be outraged... (Score:2)
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(How a vintage car ends up having internet and posting on Slashdot is a real mystery BTW...)
AI, obviously!
Haha, that may be the first time in history that anyone used the word "vintage" with respect to a Ford Escort. I expect most people would lean more towards "old junker".
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that's the difference between "vintage" and "classic"
In this day and age, yugos and vegas are "vintage" . . .
Also widespread fraud (Score:1)
They randomly charged my card for almost $60 each at restaurants I never use twice in one week. I called my bank to dispute it, I didn't even have to tell them which charges it was, they already knew. Well, I had to tell them, but they said "thanks for confirming that", and when I asked how they already knew, the answer was that they had seen a ton of the same thing lately. They are an organized crime syndicate. So is Postmates and probably Uber too. They are likely all run by the same crime boss.
Meanwhile
Parasite companies (Score:1)
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His last sentence still applies, and I'm willing to bet you can't see the future either.
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They didn't want this law (Score:2)
They didn't "want" this law. I am sure they would have been happy to pay the lowest amount anyone would agree to do the job for. The problem is that they were faced with an even more burdensome law that would have increased their costs even more to the point of putting them out of business. The are already losing investor money, so without this law they would probably have had to shut down.
Fact is that until there is a high enough volume AND robots are able to do that job, it will cost a lot of money. As it
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It is sometimes possible to pick up multiple orders on a single trip - the system is set up to do that already. As you say it's a question of volume.
they could have a system where some people get the meals from a restuarant and take it to a hub .. then from the hub someone else can deliver a bunch of meals to different houses/offices on their route.
If you want to make sure everyone food is delivered late and cold, sure. You add a lot of overhead in terms of time by delivering to a hub and then waiting for a different driver to pick it up. Add to that that the more efficient it is in terms of labor, the worse it gets for the last customer on the route, as they have to wait for everyone else's meals to b
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Once they have more customers and doordash is very common .. they could have a system where some people get the meals from a restuarant and take it to a hub ..
Even better, just locate all the restaurants at the hub.
DoorDash could set up a dozen kitchens in one building and then lease the kitchens out to the restaurants.
the problem is (Score:3)
passing the fees on to the consumer means the consumer will pass it on to the delivery driver in the form of lower tips.
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passing the fees on to the consumer means the consumer will pass it on to the delivery driver in the form of lower tips.
If that were true, then waitstaff at expensive restaurants would receive lower tips.
That is the opposite of reality.
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That's a non sequitur. People eating at an expensive restaurant expect to pay real money for both the food and the service. People ordering pizza don't.
Seems to make sense. (Score:2)
DoorDash = Assholes (Score:2)
Vote... (Score:1)