[Akababa]

A large proportion, if not the majority of my doordash orders include some sort of promotion. They're everywhere and at this point I almost have an expectation that doordash will always have a promotion that lets me order at a discount.

I think that these effective consumer subsidies are included in their "sales and marketing" budget.

[pbreit]

Pretty much every item I buy at Safeway is "discounted".

Promos and discounts are a core component of many (not all!) businesses.

[ghaff]

Safeway is sort of extreme. Many grocery chains do have some sort of loyalty card discount. But Safeway has huge discounts all over the place to the point where I make a point of slipping a loyalty card in my travel folder when I go somewhre that Safeways are common.

[Lammy]

> slipping a loyalty card in my travel folder

Serious suggestion: try (your area code)-867-5309 and it will probably work.

[strbean]

[phone] also worked last time I checked. It frequently has gas rewards as well.

[nteon]

[phone] also works

[drewblaisdell]

10-4

[kylebenzle]

people are so strangely pliant about these loyalty programs.

[ghaff]

Safeway discounts on many items can be 25-50% off. Normally I don't but some stores make it quite expensive not to use them.

[prewett]

I refuse to shop at Safeway if I have any other choice. The Safeways I've seen display their discount as $1.00 off their (excessive) price, and then expect me to believe that I'm getting a discount instead of getting the real price that they artificially raised by $1? Feels pretty insulting and manipulative.

[Lammy]

That’s why I like to use the meme card number to at least mix my data with as many other people as possible.

[nick0garvey]

You can just use 555-555-5555 at Safeway and it works, I've never owned a card.

[rib3ye]

That's a valid and interesting point, but they are also swallowing the competition. If you believe their chart on page 3, uber actually lost marketshare over the last 22 months while DD grew 33%. I imagine at some point the industry matures and S&M budget subsides.

[roenxi]

The core business model is they pick the food up in one place and put it down in a different place. "Market share" is not meaningful, there is about as low a barrier to entry for competition as it is possible to get.

It isn't an achievement to gain 100% market share if each transaction makes a loss. If they try to raise prices to neutral or profitable levels it is likely that the market will shrink and competitors will charge in.

It may be that the equilibrium market is restaurants and food outlets do their own delivery for free or at cost. Then there isn't much of a market for a service like DoorDash to make a profit in.

It is possible that there is a market there and DoorDash will one day, somehow, make more money than they spend. But having a high market share is not much compensation when it requires constant losses to maintain.

[paloaltoasshole]

Market share is absolutely meaningful here. You are assuming that Doordash is losing money on each delivery. They do not in most markets.

[three_seagrass]

They're excluded from revenue - i.e. $40 order that is $5 discounted is $35 revenue.

[MarkyC4]

Disclaimer: I haven't read the article.

My understanding is sometimes companies fudge the numbers though. If a $40 order has a $5 discount, they might consider $40 as revenue and put the $5 discount under a marketing expense

[remote_phone]

This is absolutely incorrect. You cannot take a discount as marketing expense and claim the full revenue. That is basic accounting that is not up for interpretation. If done intentionally it’s fraudulent.

[downandout]

That’s only sort of true, depending on how they do it. They advertise “promotional credits” which I assume do fall under the category of marketing expenses. Yesterday, I saw an ad that gave me a code for a $100 delivery credit from DoorDash. If I use it, my receipt will show a charge for delivery, and then a promotional credit that offsets that. I believe those credits can be reported as marketing expenses, and revenue would be the gross amount of the charge.

[fegu]

You can, if you charge the full amount and then refund via a voucher or similar.

[remote_phone]

No. Again this is wrong.

If you sell something for $100 and give a future voucher for $80, you recognize $20 in revenue for this quarter and $80 liability on your balance sheet. In the next quarter when that voucher is used on another $100 purchase, you can claim $100 revenue this quarter and remove the $80 liability. But you already took the $80 hit to revenue from the voucher on the previous quarter.

If you sell something for $100 and immediately give a $80 refund then you only take a $20 revenue.

People think the SEC and accountants are dumb or blind but they aren’t. They have seen all of these tricks before and act very quickly if they see new ways to mislead.

[dannyw]

What if you flip the order and give someone $10 in credits, expiring XYZ, and they use it on a $40 order?

Here's from the S-1:

> >> Our marketing efforts currently include referrals, affiliate programs, free or discount trials, partnerships, display advertising, television, billboards, radio, video, direct mail, social media, email, podcasts, hiring and classified advertisement websites, mobile “push” communications, search engine optimization, and keyword search campaigns. Our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may be difficult.

[belval]

This comment was downvoted, which seems to imply that it's false. Is it? I know nothing about the laws of accounting and I am curious if you can truly offload discounts into marketing expenses.

[arcticbull]

So there's two kinds of accounting, GAAP and non-GAAP.

A great example of non-GAAP accounting was WeWork's "community-adjusted EBITDA." When you use non-GAAP metrics to measure your business, you get to kind of define the standard by which you're measuring yourself. You get to do things exactly like the parent suggested, where you count 100% of the income as revenue and all your incentive spending as "marketing expenses."

Uber does this too, for instance (back when it was a thing) 100% of the sticker price of an Uber Pool ride was reported as revenue while only the 30% cut of an UberX or Uber Black was reported as revenue, and yes, they would list driver incentives as marketing expenses.

[remote_phone]

What Uber did is standard GAAP. Educate yourself on principal vs agent model.

Revenue is a well defined term and you can’t change the term just because you say “non-GAAP”. The SEC would step in because it’s obviously misleading.

[TheSpiceIsLife]

And we know with absolute certainly that fraud is occurring at scale and rarely prosecuted, so it doesn't follow that illegality results in absense of activity.

[arcticbull]

Uber is famous for such shenanigans.

[cactus2093]

ah, ok that might be true. I was thinking most promotions go to first-time users but maybe that's not the case.