Followup on Drizly / Doordash incident

When I ordered some beer via Drizly this past Friday afternoon and wrote about a really negative experience I had in the transaction, I had no idea that the rest of my weekend would be dominated by what happened next as my tweet really took off, especially among journalists and regulators. The short version: I ordered beer via Drizly and it was delivered by a Doordash driver. I tipped a Doordash driver $19.59, my driver arrived and said he wished I had tipped more. I was puzzled since I tipped $19.59, and he showed me his driver app with a “customer tip” of $4. I asked him to send me a screenshot of his app and I included that in the tweet thread. I want to thank the driver for speaking up to me and not just swallowing an unfair experience. Update 11/2: based on new information from Drizly (detailed below), the merchant (i.e. the local store) intentionally circumvented the integration between Drizly and DoorDash and entered a lower tip. This tweet was the first in an eight-part thread which includes all of the details including screenshots (be sure to read the whole thing)

Before I get into the details, why am I even following up on this? I have a busy life and many better things to do. But I absolutely hate seeing powerless people get screwed and trust being violated. I was a delivery driver for two years at a time in my life when I was having trouble making ends meet (it was how I made my rent), and even then I was in a much more privileged position than most delivery people now. These people work hard and kept many of us living in comfort during the depths of the pandemic. Many are immigrants trying to make it here. Also, DoorDash is the #1 delivery app right now and if they do the right thing, the overall impact will be greater (and if they don’t, the harm is greater) In a very crowded market, DoorDash owns 57% of the market according to Bloomberg’s September 2021 numbers (see graph on this page). And, finally, the insanity that is Twitter makes it more or less impossible to have an orderly discussion about anything with even the slightest bit of complexity so I feel obligated to lay out what actually happened and what I learned in the more sane environment of linear narrative that is one’s personal blog.

Note that there were FIVE entities involved in this transaction: 1) Drizly, 2) Doordash, 3) the merchant (the local store), 4) the delivery driver, and 5) me. I’m not naming the local store or the driver. (Note: Uber announced the acquisition of Drizly in February 2021, a fact which doesn’t figure directly into this story but does make me wonder how Uber’s competing Uber Eats business might affect Drizly’s commitment to enabling any part of DoorDash’s business or doing a solid well-functioning integration — but that’s just speculation).

The response from DoorDash

Doordash did reply later that night with a multi-part thread that said that they made sure the delivery person got the full tip amount and I appreciate that. You can read the whole thread:

Since the very structure of Twitter makes it extremely difficult to follow what is going on I’m including the DoorDash thread here:

(@DoorDash) Thank you for alerting us to this issue. DoorDash always provides 100% of tips to Dashers, so we immediately started an investigation to uncover what occurred and how to make it right. Here’s what we discovered and the actions we have taken:

(@DoorDash) 1/ This order was placed through the Drizly platform with a merchant that used DoorDash’s Drive platform to power the delivery of the order.

(@DoorDash) 2/ The merchant entered “$4” into the tip field, instead of the full amount provided by you, the customer. Our policies and contract with the merchant require the merchant to provide the full tip amount to DoorDash, which we then provide in full to the Dasher.

(@DoorDash) 3/ By withholding a part of the Dasher’s tip when it relayed the order information to us, the merchant violated our policies and their contract with us.

(@DoorDash) 4/ Far more importantly, it meant that a Dasher was shortchanged the full tip you provided to them. This is unacceptable and a clear violation of our contract with the merchant, who was immediately removed from DoorDash Drive.

(@DoorDash) 5/ We have ensured that this Dasher received 100% of the original tip and are looking into solutions to ensure this doesn’t happen again [end of thread -CD]

Again, I’m glad they made my transaction right and took care of the driver. I’ve also been in PR war rooms myself and know that every word is carefully crafted. The words that stick out to me are “[we] are looking into solutions to ensure this doesn’t happen again.” “Looking into solutions” is doing a lot of work here. (see towards the end of this post for some quick thoughts from me on solutions).

Tom Pickett, Chief Revenue Officer of Doordash reached out to me that evening and we talked in real time on Saturday afternoon. I appreciated that he reached out and noted with some humor the bad luck of this particular situation happening with a former marketplace CEO/CTO. I’ll share more of our discussion but wanted to lay out the response from Drizly first for greater context. The most important finding in this conversation with Tom was that he said 99% of transactions on DoorDash go through a fully-integrated system where it’s not possible to alter the tip. This was a 1% “edge case.” At no point did Tom make excuses for what happened — he just explained why — and I appreciated that.

Companies say things all the the time that are unverifiable but two people who saw my thread ordered from DoorDash and confirmed that they didn’t have an issue like mine so this does add up:

The response from Drizly

I received a DM from Drizly (@Drizly) the same afternoon. Inexplicably, the said, “(@Drizly): In reviewing your order, it would appear that this was delivered by our retail partner’s driver, not Doordash.” I responded that it didn’t make any sense at all with the link to the DoorDash tracking I was provided along with the receipt from the driver with the low tip. This gave me the sense that this relationship with DoorDash was pretty loose and uncoordinated. The DM also asked for more about “the details of [my] experience” but the gist of the explanation on tipping was this:

(@Drizly) When orders are placed through Drizly it is our intention for the tips to go to the driver, as Drizly does not keep any portion of the tip. In most cases, this is what happens. Please note that each store manages their individual tipping policy at their own discretion, however, so the tips received may be distributed differently from store to store.

This matches what Drizly says on its “Driver Tipping” help page: “Each store manages their individual tipping policy at their own discretion, so the tips received may be distributed differently from store to store.” Here is a screenshot:

A full 24+ hours after my original tweet, Drizly started replying publicly on Twitter, first with this tweet:

For readability, here is the full thread:

Hi Chad. Thank you again for bringing this to our attention. Delivery workers are critical in making every Drizly delivery a reality and we treat situations like this with the utmost importance. 1/4

Drizly never receives any portion of customers’ tips. The standard protocol is that tips are collected directly by the Drizly Retail Partner or are automatically passed to third-party delivery partners such as DoorDash, for ultimate distribution to the delivery personnel. 2/4

Unfortunately, this order did not follow standard protocol. Instead, the retailer skipped the standard Drizly/DoorDash integration and summoned DoorDash on their own after the transaction was complete. 3/4

We’ve launched an immediate investigation into your order. DoorDash assures us that the driver has now received the full tip. We’ve paused the Retail Partner’s Drizly account while we conduct a further investigation. 4/4

Drizly has continued responding to others in my original thread so feel free to dig through if you want to see what else they had to say.

Update: November 2, 11:05am EDT: Yesterday, Drizly gave more detail on the specifics of what happened in this response to someone on Twitter:

Here is the full thread for readability:

(@Drizly): We have an API integration w/ DoorDash that many retail partners have opted into. Those retail partners can leverage this API directly w/in Drizly to summon delivery personnel. Through this integration, the tip/ delivery fee automatically goes to DoorDash for distribution. (1/3)

(@Drizly)It’s required that our retail partners use our tools, inc. this one, to process Drizly orders through every stage. With this tool, there is no option for the retailer to edit the tip amount. In this specific instance referenced, the retailer circumvented this integration… (2/3)

(@Drizly) …and used a separate DoorDash account to summon the delivery personnel outside of Drizly. This is a serious issue to us and is against policy. We are addressing with the retailer and are investigating further to prevent this from occurring in the future. (3/3)

The merchant and a cross-platform policy conflict

I haven’t had any conversations with the merchant because 1) I had no direct contact with them, and 2) I haven’t had time (this incident and trying to figure out what happened has eaten many, many hours of my time already). But I honestly feel a little bad for them and plan to follow up. Both DoorDash and Drizly blamed the merchant (with some very good reason) but although the policies could be considered confusing and contradictory (more on that below). Tom from DoorDash said they reached out to the merchant and he did say it was a busy time where they were backed up with a mix of orders, some being self-delivered and some delivered via DoorDash. In any case, DoorDash said on Twitter that they kicked them off the platform for violating their contract and Drizly “paused” their account while they investigate.

As for the policies themselves, we’ve got what appears to be a conflict here in the policies of two of the entities involved:

Drizly says tip distribution varies from store to store, which isn’t unlike what is traditionally seen in some pockets of the restaurant industry as “front of house” (e.g. waiters) share tips with “back of house” (e.g. cooks) (known as “tip pooling” and mentioned on this US Dept of Labor fact sheet):

  • “Driver Tipping” help page: “Each store manages their individual tipping policy at their own discretion, so the tips received may be distributed differently from store to store”
  • DM to me (posted above): “When orders are placed through Drizly it is our intention for the tips to go to the driver, as Drizly does not keep any portion of the tip. In most cases, this is what happens. Please note that each store manages their individual tipping policy at their own discretion, however, so the tips received may be distributed differently from store to store.”

DoorDash is adamant that 100% of all tips go to its drivers:

  • Tweet to me (covered above): “DoorDash always provides 100% of tips to Dashers, so we immediately started an investigation to uncover what occurred and how to make it right”
  • DoorDash Drive tipping page: “Customers can leave a tip when they check out for a delivery order. 100% of tips are passed onto the Dasher.”

I can understand why a busy liquor store owner in Brooklyn might get confused by these two conflicting directives from Drizly and DoorDash while interacting with both systems (Update 11/2: I feel differently about this given Drizly’s description of what happened which you can read at the end of the “Response from Drizly” section). At minimum, I would expect Drizly to do something like update its policy to note that all deliveries via DoorDash are expected to give 100% of tip to the driver.

So what *exactly* happened?

It took a lot of work to figure out exactly what was happening but I’m fairly sure the behind-the-scenes workflow worked as follows:

  • My order went to Drizly and I entered a $19.59 tip
  • Drizly sent the order to the local merchant
  • The merchant decided to use DoorDash’s white label “DoorDash Drive” product sometime after the order was submitted, which allows any merchant (even those outside of DoorDash’s marketplace that you use to order food) to make a delivery happen. Note that some local merchants do their own delivery so the decision to use DoorDash Drive can be a bit spur-of-the-moment.
  • (Added on 11/2) According to Drizly (see update at the end of the “Response from Drizly” section above), the merchant purposefully decided to use a different DoorDash account that was not integrated into the system to make the delivery, giving them the ability to enter the tip amount.
  • The merchant entered a $4 tip in the DoorDash Drive Portal that is used to manage orders, not the $19.59 I had originally entered in the Drizly app.

If you look at the DoorDash Drive Portal help page, you can see what this screen looks like for yourself: a blank, not pre-populated field for the driver tip:

What this boils down to is an “honor system” approach. Again, Tom Pickett (DoorDash CRO) told me that 99% of their activity if “fully integrated” (meaning all the data is passed directly with no opportunity for manual entry of tips). As DoorDash mentioned in their tweet response, they are “looking into solutions to ensure this doesn’t happen again” so I will assume for now that it can and will happen again (though as a 1% edge case) until they put a solution in place.

It is hard for me to figure out what the scope of this edge-case problem actually is in dollar amounts by looking at publicly-available data. DoorDash did $24.7 billion in transactions on its marketplace in 2020 (source: DoorDash 10-K, aka annual report). Based on what Tom told me, all of the marketplace transactions using the DoorDash app or DoorDash web site are fully integrated so it would be impossible to alter the tip so all of that $24.7 billion should have passed on tips correctly. The DoorDash Drive platform sits outside of the DoorDash Marketplace business so it is probably a fraction of total marketplace volume (and the model is a fee per delivery, not a percentage), but 1% of a big number could itself be big. And when money is involved, allowing a merchant to enter a tip amount on the honor system is ripe for abuse. But, then again, Drizly — where I entered my actual tip — says that stores can allocate tips in different ways. In any case, this needs to be fixed. My driver got lucky that he delivered to someone with some influence who was willing to take the time to make sure he was properly compensated on this one transaction. The system itself needs to be fixed so it works for everyone.

Quick thoughts on solutions: centralized (government) or decentralized (blockchain)

One obvious approach to making sure this doesn’t happen is greater governmental regulation of these industries. This is happening to some degree. Localities are passing regulations that affect the operations of food delivery platforms and there is quite a bit of litigation, too. DoorDash has been a defendant on many lawsuits and I won’t make this long post even longer by guiding you through them (it’s Halloween – I have a young kid and plan to give out candy to the neighborhood kids and have some of those Drizly/DoorDash beers with the parents). They are easy to find with simple Google searches but the tipping issue is not a new one (see this one from August 2019: “DoorDash settles lawsuit over old tipping model for $2.5M.”) DoorDash addressed the tipping model in a tweet thread from CEO/founder Tony Xu:

From a more technical angle, as I thought about this over the past few days, it struck me how much attention is being paid to web3 and the blockchain. Most of the energy is being focused on NFTs and all of the insane values of transactions related to art and most of the activity I’m seeing is a small group of already-wealthy people. Regardless of who is to blame in this complex transaction, the root issue is that the more powerful were messing around with financial data (tips) that should have benefited the less powerful, but instead seemed to enrich themselves at the less powerful’s expense (even if they ultimately corrected it under pressure and paid some consequences). It left me thinking: how about we leverage core concepts of the blockchain (like immutability of data) to make sure that working people get paid what they deserve every single time? Let’s make web3 the “power to the people” web we’ve always wanted but haven’t quite gotten yet. (I haven’t really been passionate about this space and am not really that into it, to be honest, but this is the kind of thing that would flip the switch for me.)

Final note:”Always tip cash” not such an simple solution

A LOT of people said I should have just tipped with cash and they would put a note on the order saying something like “will tip with cash when you deliver.” First, if the tip amount isn’t always passed on to the driver, I think it’s safe to say that the message about a tip might not make it either. Also, many delivery people I’ve dealt with don’t speak English so your message may be impossible for them to read. Finally, according to one of the the only DoorDash drivers I saw in the thread, it reduces the incentive to even make a delivery at all:

Speaking as someone who did do food delivery in a time where cash tips were customary, it’s also absolutely terrifying to approach an unknown house or apartment at 1am on a Saturday with pockets full of cash tips. (I recall someone sneaking up behind me in a parking lot once and saying, “hey, give me your money!” only to laugh it off and say “just kidding.”) Delivery workers are targets for their electric bikes (see this NYT story). Imagine if there was a mass movement where everyone gave cash to get around the lack of transparency in tipping in some of the delivery apps. The unintended consequences are clear in a population that is already vulnerable to robbery. Tips in apps could actually promote greater safety for drivers and we have to be able to depend on our money getting to the right place.

In the end, I’m glad my driver got his money but it took a lot of work to make that happen. I’m going to be paying much closer attention to this industry and I hope everyone reading this will, too.