DoorDash boss says company will change contentious tipping model
Firm to iron out the details 'in the coming days'By Cal Jeffrey
Bottom line: DoorDash CEO Tony Xu issued a series of tweets Tuesday evening, explaining that the company would be changing its payout model for "Dashers." He did not go into specifics, but said that couriers "earnings would increase by the exact amount a customer tips on every order."
The informal announcement comes on the heels of an exposé published in The New York Times over the weekend that showed how tips from DoorDash customers seemed to evaporate under its current payment system. This revelation is nothing new. DoorDash has been skimming tips all along, and publications like Gizmodo and NBC have recently reported on the policy.
The NYT article explained how the payment system worked.
"DoorDash offers a guaranteed minimum for each job. For my first order, the guarantee was $6.85, and the customer tipped $3 via the app. But I still received only $6.85. If the [customer] had tipped zero, DoorDash would have paid me the whole $6.85. Because she tipped $3, DoorDash kicked in only $3.85. She was saving DoorDash $3, not tipping me."
2/ But it's clear from recent feedback that we didn't strike the right balance. We thought we were doing the right thing by making Dashers whole when a customer left no tip. What we missed was that some customers who *did* tip would feel like their tip did not matter.--- Tony Xu (@t_xu) July 24, 2019
4/ Going forward, we're changing our model - the new model will ensure that Dashers' earnings will increase by the exact amount a customer tips on every order. We'll have specific details in the coming days.--- Tony Xu (@t_xu) July 24, 2019
The way the company justifies the payment scheme is that its guaranteed payout includes an estimated tip. So if the customer does not tip, the delivery person still gets the same payout. The Dasher receives more money only if the gratuity is generous enough to exceed the minimum guaranteed fee.
The chief complaint regarding this system is that it is not transparent enough. It appears to the customer that the tip is going to the company rather than the Dasher. Xu explained that the company felt like it was "doing the right thing" by compensating even when the client does not tip. It failed to see that the policy causes customers to feel like their tip does not matter.
It is unclear exactly how the company is going to implement these "transparency" changes. Will it involve lowering the guaranteed payout and letting the Dasher keep all tips? Will the fees stay at the same level with tips added after delivery? Xu promised more information in the coming days.
Image credit: David Tonelson via Shutterstock