Comment by jeroenhd
6 years ago
It's nog a bug, it's a feature. Doordash uses investment money to evaporate competitors, take over the market and then raise prices for restaurant owners once they gain control. It's a tried and proven concept.
Paying part of the meal is part of that strategy. They know full well that large orders and large amounts of transactions cost them more money and they're betting on nobody actually doing this. They're selling products below the cost of production at this point, something that I would argue should not be allowed in ethical capitalism. Investors know fully well what they're investing in, and of not, they've either not kept their responsibility on reading about the company they're investing in, or the company itself is pulling massive investment fraud.
Play shit games, win shit prices. If they don't want to lose money like this, maybe they should have a business strategy that isn't oriented about purposely losing money to bankrupt competitors. They easily could've set a reasonable limit of say $200 dollars to their cheaper transactions but they chose not to.
Would I go full ethical when finding exploits for an inherently unethical company? Would I dutifully report flaws to companies selling "adult supervision" apps used by controlling spouses? Would I give "bank phishing on demand" websites a 90 day trial period? I don't think so. Making such software is perfectly legal (in many jurisdictions) but is rarely ever ethical. Ethics would need to come from two sides for me to consider responsible disclosure. I have flooded several phishing databases with fake information, got some of them over their resource limit and shut down as well, and I don't feel the smallest bit of regret.
Just a note: it's not a tried and proven concept.
Predatory pricing hardly works in economic theory and is working disastrously for a lot of the companies trying it (eg. Ubers financials)
Where I live, one company has taken over all meal delivery nationally. After destroying the competition, this company had started raising prices each year. They ask for a percentage (13%, rising each year) in an industry where the margins are already very thin.
They money grab got a lot worse after they pushed out all the alternatives and just like with Google, everybody has to play by their rules or they'll be mostly undiscoverable for a large portion of the general public. Their delivery people are still underpaid, but by increasing their percentage of the bill they take for themselves they're now turning a profit. It's gotten to the point where companies are not even allowed to lower their prices when people use other delivery systems (or the restaurant's own personnel) which are cheaper.
The company only got this large because they could afford making losses for many years. Now other companies such as Doordash are trying to cut into the market as well, using hundreds of millions of foreign cash flows and putting business owners under even more pressure. Had there not been a company doing this since 2014, Doordash or any of its competitors would have taken the market regardless.
This is the biggest problem with the reality of predatory pricing compared to the theory of it: after years of undercutting your competitors, you're finally ready to jack up prices and take a profit....just as a new competitor comes in with a new infusion of cash and undercuts your artificially inflated price. (Remember, you can't just turn any old profit, you need a large enough profit to offset the years of purposefully selling at a loss.)
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Rappi?
Predatory Pricing absolutely works... when you have a working business model and capital to back it up.
Walmart and McDonalds are masters of this approach.
Uber is a long-term play at disrupting cabs/transportation cartels and incorporated self-driving cars into a non-literal roadmap. They're in it for the long play, and even if they hemorrhage money for a while longer it may, in fact, play out in their favor.
Walmart and McD don't do predatory pricing -- they just have lower prices while being profitable.
Predatory pricing is intentionally setting loss-making prices to drive out competition to then hike prices to profitable levels.
Notice this isn't what "ultra returns to scale" businesses are doing -- they're just profitably pricing low.
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Of all the ways I can imagine self driving cars becoming a reality, Uber creating a fleet of honest to goodness self-driving taxis seems to be about the most far fetched.
On balance of probability, I think that is just a bullet point to keep the juicy AI flavoured investment funds flowing.
How can you call McDonald's predatory pricing? They have been cheap and profitable for decades.
At best you could try to argue that they make their money fleecing dumb "business owners" who pay for franchises.
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It only works if you have an easy path to monopoly once you price your competitors out. A company like WalMart or Amazon can leverage their returns to scale on logistics to actually price out Mom&Pops. That way, even after the drive the small stores out of business it’s just not worth it for anyone else to try to cut in unless they can also operate at WalMart scale and afford to bleed money for a while until WalMart gets tired of undercutting them.
But there are no appreciable logistical or operational efficiencies in how these delivery services operate. And there aren’t any barriers to entry. The workforce is completely fungible so they aren’t locked in. And just the fact that delivery services are popping up like mushrooms suggests it doesn’t take much to start one up.
In theory they could eke put some advantages to scale that keep out upstarts by using machine learning to optimize delivery routes or something. But I doubt that gets them the kind of efficiency gains they would need to actually turn a profit. From what I’ve seen, it looks like their main attempt to freeze out competition is just coming from flooding your search engine hits. I don’t know how sustainable that is either.
Name me one time in the last twenty years that this "tried and proven" concept has worked?
My original comment said its not okay to steal from a company even if you don't like that company. Your post is a lot of words about why you don't like that company. You don't directly address my claim that its unethical to steal from a company even if you don't like the company.
And then you make a weird point that software can be unethical (e.g. phising software) and this somehow applies to Doordash. Just to get this straight, making peer to peer scheduling software used for deliveries is unethical? And because of that, its okay to steal from their investors (including many US investors and pension funds)?
> My original comment said its not okay to steal from a company even if you don't like that company.
Your original comment said it was wrong to exploit a bug, to which the parent poster retorted that this was a feature and not a bug.
Here, you've gone further to claim that this behaviour is stealing, and I'd like to explore that for a minute: what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?
By all accounts, this below-cost pricing is predatory behaviour on Doordash's part, not the customer's: they seem to break into a market by offering delivery at a subsidized rate, then they take data based on those rates and try to strike fee arrangements with restaurants. At first glance, it seems like they sell themselves based on inflated numbers from the discount period, without disclosing that they were in fact offering customers a discount.
I see no ethical fault in beating a (sophisticated!) predator at their own game, but where do you reach the alternative conclusion?
Would it have crossed the line if the OP had tweaked the Italian places website (say for example setting a 0 height div) to include fake prices intended for the scraper to misinterpret?
For me I think it would have. Which makes me pause to consider whether I find the whole scheme too close to the ethical boundary.
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I think it is a bug. I think they relied too heavily on automation and scraping to get a list of all the restaurants, menus and prices. From the original article:
> My first thought: I wondered if Doordash is artificially lowering prices for customer acquisition purposes.
> My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.
So I don't think its a feature.
> what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?
It doesn't have an operating profit whether you exploit the bug or not. Doesn't mean its okay to steal from them. Even if they do deliberately lose money (e.g. first Uber ride free up to $10), exploiting it is unethical (e.g. tricking Uber into thinking you're on a new phone).
The rest of your argument is again, why you don't like Doordash or why Doordash is unethical. I won't address this point because I think its unethical to steal from an unethical company so their ethics is irrelevant.
If I think Walmart is unethical, is it okay shoplift from their stores?
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How do you define "stealing"?
On Wall Street this is called arbitrage.
If you don't want to lose money on sales, don't sell for less than your cost. People buying your product is not "stealing".
My comment also stated that it's not stealing if you order from a business that decided to operate in a way that causes them to lose money if you order with them.
Investors know that the company they're investing in will lose a lot of money and the know about the business practices that basically give away money in order to gain popularity. It's not their money anymore after they gave it to the company. It's true that if the company goes bankrupt they lose out, but they can prevent losing that money by not investing on companies handing out free cash.
The software itself is not unethical, the business practices Doordash/Uber/Yelp/etc. follow to make their software popular are. The problem is that these companies seemingly can't make a profit without using huge investments to crush the local competition. If they were to act ethically, I would have no problems with these companies.
Also, taking away future profit is not stealing, it's part of the risk of doing business. Don't stuff your money into risky business ventures if you don't want risk.
It's quite sad that pension funds are investing in these predatory businesses but protecting their investments because they're too big to fail undermine the entire concept of competition in capitalism.