Comment by bransonf
6 years ago
Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less)
But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.
What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)
If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.
Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.
What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.
> The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
It kind of happens by default if your goal is "growth at any cost".
The video you mention is likely this one, and it's actually even more extreme: https://www.youtube.com/watch?v=bqPARIKHbN8
The fake restaurant in their garden shed, which never took customers or delivered any food, climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.
While that is a good video (and demonstrates manipulation of TripAdvisor), I'm pretty sure the commenter means this one: https://www.youtube.com/watch?v=k47u9tduwb8
This video features (a) delivery and (b) reimbursement, both mentioned in the original comment but not present in your video.
I gave a lecture in marketing at an university using that story.
To this day it is one of my favorites.
is it actually real though? I imagine it'd be really difficult to pull it off. what if somebody who reviews restaurants would go there on, say, Monday? or at lease, even if they don't get in, just try to check out the place from 'waiting area' or at least outside.
Youtube videos have reputation for being fake, I wonder if this is actually true.
I saw that video a year ago... pretty epic.
>The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
In the article they say:
> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.
Google tracks outclicks, so setting a lower price at first is a cheap enough SEO tactic.
Anyone know if it would be considered fraud and/or illegal to exploit this? I would consider doordash and grubhubs tactics of falsely representing themselves as restaurants to be more unethical. It would be great if someone could scale a solution that would take those arbitrage opportunities and pass them on to the drivers and the restaurants.
Yes, it's fraud.
In general, knowingly obtaining money, goods or services you know you are not entitled to is fraud/illegal.
Here's an example of someone going to jail for knowingly exploiting a glitch: https://www.inquirer.com/philly/hp/news_update/20071026_N_C_...
Your case is more clear cut because that is a glitch in the website. It seems that in this case Doordash is offering a promotion. Calling that fraud would be like calling taking advantage of reward points fraud.
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It seems like it would depend on who's initiating the action.
While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud, I'm not so sure "Asking the restaurant owner about their costs, then independently ordering a large number of pizzas" qualifies.
It's not your responsibility if Doordash has shit code and auditing. And given VC-onomics, it's not even clear how you would be certain this isn't "operating as intended."
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It doesn't seem like fraud when they are still delivering an actual pizza; that's basically just leveraging a sale. It becomes more dubious when they aren't delivering the finished good.
The driver pays with a Doordash prepaid-reloadable card. When the driver GPS-checkins at the restaurant they're picking an item up at, the card is loaded with the exact balance the restaurant is "supposed to charge"
At that point door dash still thinks the pizza will cost much less, so if it's only the total the customer paid that's authorized, then how does the full cost of the order get paid?
In the article it makes clear that doordash calls the restaurant from their call center to make the order and gets the correct total verbally. Ostensibly this is what gets loaded to the delivery worker’s card.
Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.
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The amount is calculated off of what DD thinks, not based on what the restaurant charges.
Yes, this causes a significant amount of driver support issues where they have to live chat in because their red card is declining.
The driver is instructed to not give the restaurant receipt to the diner.
I wonder to what extent the back end software supporting this is identical to, or similar to, what Moviepass created.
Think of something similar to https://stripe.com/issuing (Postmates apparently uses this, same industry).
Doordash's are debit mastercard, iirc.
This mechanism reminds me of Moviepass.
This is basically the same backing service, corporate-issued "cards"
Yes, it has been exploited exactly like you described. An example that I remember - Foodpanda in India. I guess fraud costs are massive for all the food delivery startups.
source: http://www.livemint.com/Companies/rYKC6HjnShogjE62jO5lpK/The...
That may explain why individual restaurants fare better at delivery; obviously they would catch a fraud immediately and are therefore immune to it.
From the title I expected a story of how Doordash is running a pizza arbitrage scheme. Using an expensive restaurant name, and having the drivers go to a cheap pizza place to get the pie.
Pedantically, that wouldn’t be arbitrage, it’d just be fraud. Arbitrage would involve exploiting differences in price for the same good/commodity, i.e. not substituting a different item...
>If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.
If it's trivial to launder money this way then it is a really good idea to build your own food delivery service and start doing all sorts of money laundering through it.
> Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less
Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.
>does anyone actually order franchise pizza on an app
I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely start the order over from scratch if we change our plan mid-way. It would be rude to hold someone on the phone for that. Plus the app gives better real-time update on the status of my order. I know when it leaves the oven, when it gets picked up by the driver, etc.
I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone.
I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?
> I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?
Papa Johns is listed on Deliveroo. I often order PJs through Deliveroo when I'm hungry and don't want to think too much.
It costs more in money, it costs less in cognitive load. I know what I'm getting as far as the food is concerned, PJs is remarkably consistent, and I don't need to bother signing up for a new account with someone, working out payment details, etc.
You'd be surprised how many people like myself exist. Not everyone has every aspect of their financial life fully optimised. This is one area where I definitely have room for improvement.
In the mean time, Deliveroo ensures that when I'm exhausted at the end of a long week, I'm only a few clicks away from repeating my last PJs order and my Friday lunch pizza will arrive with minimal effort.
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You may be right, and if so then I agree that it doesn't make sense to order PJ's, Domino's, or Pizza Hut through a generic app. My (perhaps incorrect) interpretation was based on the fact that I've never seen one of the big chains available in the generic delivery apps.
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Yeah, and big chain apps and mobile sites, while not amazing at times, all work pretty well now.
Outside of a few odd situations now and then, most big chain apps (if they typically take mobile type orders) .. offer a competent experience.
Other benefit is if you sing up for some "club" or email list you'll often get a coupon or etc.