Dive Brief:
- DoorDash announced in a blog post Tuesday that it began rolling out its new pay model for its delivery workers, which the company calls Dashers, on Sept. 1, and that as of Oct. 1 all Dashers were transitioned to the pay model.
- Under the new model, Dasher pay grew 12.5% on average and overall Dasher earnings including tips rose by $1.30 from an average of $17.24 per active hour in August 2019 to $18.54 per active hour in October, according to analysis from consulting firm Beacon Economics.
- DoorDash customers are now able to tip before or after placing their delivery order, and Dashers can view a breakdown of their earnings (such as base pay, peak pay and tip) in the DoorDash app.
Dive Insight:
DoorDash CEO Tony Xu announced that the company would change its tipping model in July after a New York Times article detailed how the company used delivery workers' tips to subsidize their base pay. If the total tip exceeded a Dasher's base pay, the delivery platform used it to subsidize driver pay — paying the employee less than if they had not received a tip. This drew public outcry against DoorDash's system and similar models from delivery rivals.
"It's clear from recent feedback that we didn't strike the right balance. ... What we missed was that some customers who *did* tip would feel like their tip would not matter," Xu tweeted in July. "We did not launch our current model to pay Dashers less."
The new model that began in September gave contracted workers base pay of between $2 and $10, a big uptick from $1 under the old system. Base pay varies depending on delivery distance, difficulty and time required to fulfill the order. Workers now receive the entirety of customer tips independent of their base or bonus pay.
Though these initial findings are positive, it will be interesting to see how drivers — and customers — feel about the changes over time. Rival platforms including Uber Eats, Grubhub and Postmates have already given workers 100% of their tips, and DoorDash's new policy could potentially open them up to more drivers.
Partnering with an independent third-party, like Beacon Economics, to deliver these updates could also ease consumer ire over the company's past lack of transparency, which could help the platform maintain diner loyalty and avoid lawsuits.
