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Can Rivals Catch DoorDash?

As its network effect strengthens, we think the company can maintain its lead.

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DoorDash (DASH) is the number-one online food order aggregator in the United States, ahead of Uber Eats (UBER) and Grubhub (JET)/(TKWY). The company is in the early stages in trying to attract to its platform a larger piece of what we estimate could be $1 trillion worth of goods and services by 2025. DoorDash benefits from the network effects between merchants, deliverers (or "dashers"), and consumers, plus intangible assets in the form of data, which we believe together warrant a narrow economic moat rating.

Consumers use DoorDash’s app to order food for pickup or delivery from restaurants. DoorDash currently has a 56% share of the U.S. market, above Uber’s 26% and Grubhub’s 18%, according to data from Second Measure. The company has over 450,000 merchants, more than 20 million consumers, and 1 million-plus dashers on its platform. We view the primary market that DoorDash is targeting aggressively--consumers spending on food and beverages away from home--as attractive and expect it to grow 4%-5% annually in the next five years. DoorDash has also begun to provide similar services to businesses in industries other than restaurants, such as grocery, retail, pet supplies, and flowers.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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