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Do DoorDash layoffs signal tough times ahead for same-day delivery services?

Written by RetailWire Staff

Photo: DoorDash

Same-day delivery service DoorDash recently announced the layoff of 1,250 corporate workers, raising questions as to whether this is a result of a company in trouble, a contracting vertical, an impending recession or elements of two or three of the above. Tony Xu, DoorDash CEO, on November 30 publicly announced the layoffs in a release posted on the DoorDash corporate website. In it, Mr. Xu said that the company had initially been undersized but scaled dramatically during the pandemic, due to the unprecedented demand for delivery services from locked-down shoppers. He confessed to having failed to manage operational expenditures while scaling the business, increasing hires and launching new initiatives. He also cited tapering growth as the pandemic has waned. Mr. Xu announced some compensation for those subject to layoffs, including 13 weeks of pay, plus a one-month lump sum of severance, healthcare through March 31, 2023 and the chance to appear in a directory for other companies recruiting for new positions. Just a few months ago DoorDash was still focusing on expansion, announcing a number of new retail partnerships in September of 2022. In addition to its existing agreements with grocers like Walmart and Albertsons, the company began delivering products across categories from Sprouts Farmers Markets, EG America, Big Lots, Dick’s Sporting Goods, Giant Eagle, Weis Markets and The Raley’s Company. The personnel shakeup at DoorDash comes as a number of major U.S. businesses across verticals have likewise undertaken major layoffs. Tech companies such as Meta (formerly Facebook), Salesforce, Twitter and Shopify, e-tailers such as Amazon and Wayfair, and brick-and-mortar retailers such as Gap and 7-Eleven are but a few of the names a recent Business Insider article reports as having made significant recent staff cuts. Besides DoorDash, others in the same-day delivery space, such as ultra-fast delivery startup GoPuff, have also undergone a recent round of layoffs. DoorDash was described as being defined by volatility in a recent article on The Motley Fool, which pointed out that the company had struggled to reach profitability in the two years since its initial public offering.

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