A week or so ago, DoorDash CEO Tony Xu gave an interview on CNBC about the company’s overarching strategy. No surprise, he talked about the boom in business at the start of the pandemic, then began discussing the recent pivot to delivering alcohol with meals.
It revealed a brilliant strategic approach all companies can learn from.
First, the expansion of services: Delivering alcohol is a win-win-win, he noted, giving restaurants higher tickets, dashers higher tips, and consumers, well, booze on demand. It’s also an easy reach for a company that started in food delivery — what goes more naturally with food than alcohol?
The associated product/service tack for business expansion is not new. Uber did something similar by moving from transporting people to transporting food to transporting home goods.
But as Xu alluded to in the interview, next-level growth for DoorDash depended not on infrastructure but on building (and leveraging) trust and reputation.
Jon Fortt of CNBC touched on this, too. The successful addition of alcohol to the company’s delivery portfolio was not just possible because they had the resources and infrastructure to verify and adhere to strict state-based alcohol guidelines. It was possible because consumers trusted DoorDash enough to get this right, so they kept using the service.
Xu, recognizing this established trust, moved to the next delivery category: pharmaceuticals. Partnering with Sam’s Club as a white label delivery provider, they’re now leveraging their vast resources, security/safety tools, and reputation to make regular pharmaceutical drug delivery as easy (and safe) as grabbing late-night Taco Bell.
This progression — from B2C-focused food delivery with crowdsourced drivers, to B2C alcohol delivery, to B2B partnerships allowing for delivery of pharmaceuticals is all possible because trust-building came before further service expansion:
“We’re making sure we can get the quality right — getting everything from logistics to safety to security to privacy right so that each order can happen the right way every single time,” said Xu. “When we know we can do that, then we’ve earned the privilege to partner with [others].”
This approach is often opposite to business practice. Many companies, eager to get in the market and compete with their products and services, launch as soon as possible and fix the kinks later. In the meantime, trust is hard to establish and reputation suffers.
The lesson is clear: Build infrastructure, yes, but don’t be so keen on getting to market that you forget the number-one thing you have to offer customers: trust. Whatever product or service you roll out in the future, it won’t see success without a consumer base that trusts you.