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The Lesson for DoorDash? Transparency is Inevitable

This, not to mention the many other articles written about Doordash’s, shall we say, less than transparent policy for handling tips, has left me scratching my head.

Why the head-scratching? This is 2019. Not 2009. Not 1999. In today’s world, sleight of hand practices like this WILL be exposed. And in fact, the practice has received substantial negative press coverage in recent months, exacerbated recently by a New York Times reporter’s story on his 27-hour experience as a dasher.

Today, transparency is fundamental to any relationship — business or personal. In this age of modern commerce, it is not if, but when, business practices that are not clear and above board will get called out. When this happens, brand damage can be significant. Even fatal. We’ll see if these stories about Doordash will move traffic to competitors like Postmates and UberEats. I suspect it will.

I wonder why a company valued just two months ago at more than $12 billion would put its brand at risk like this. Sure, the company can spin an argument that the dasher is being provided a guaranteed per delivery fee. But this clouds the consumer’s view of who they’re actually tipping. Sure, the obvious workaround for consumers is to tip the dasher in cash. But until now, the consumers were largely unaware that their in-app tips were subsidizing a well-funded startup rather than helping to support struggling gig economy workers. How were they supposed to know, beyond intuition, that it’s better to tip in cash?

A big problem with the cash tipping remedy, beyond putting an ethical burden on the consumer’s shoulders where it doesn’t belong, is that many of the heavy users of services like DoorDash are millennials who are more likely to live a cashless lifestyle. So now their predicament is, do they tip via the app, knowing now that part of the tip will go to the company and not the dasher? Maybe they don’t tip at all? But this option doesn’t help the dasher either. Perhaps, just maybe, they’ll go to an ATM and pull out some cash specifically for these instances? Seems unlikely.

We wrote earlier this week about how millennials support brands that represent values they support. The DoorDash controversy could put this theory to the test.

What really matters here, of course, is why Doordash’s management team thought this wouldn’t become an issue for its brand. I guess when you have investors pouring gobs of money into your enterprise at a $12 billion valuation, you might forget that we live in the age where the modern consumer has vastly greater power than yesterday’s counterpart.

Update: DoorDash has just announced it will now give 100% of in-app tips to its dashers, in an apparent bow to all the bad publicity. Few details were shared on how the new policy will work, but this does seem to be a textbook case of the power of transparency.

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