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> The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

It kind of happens by default if your goal is "growth at any cost".

The video you mention is likely this one, and it's actually even more extreme: https://www.youtube.com/watch?v=bqPARIKHbN8

The fake restaurant in their garden shed, which never took customers or delivered any food, climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.

I saw that video a year ago... pretty epic.

While that is a good video (and demonstrates manipulation of TripAdvisor), I'm pretty sure the commenter means this one: https://www.youtube.com/watch?v=k47u9tduwb8

This video features (a) delivery and (b) reimbursement, both mentioned in the original comment but not present in your video.

I gave a lecture in marketing at an university using that story.

To this day it is one of my favorites.

is it actually real though? I imagine it'd be really difficult to pull it off. what if somebody who reviews restaurants would go there on, say, Monday? or at lease, even if they don't get in, just try to check out the place from 'waiting area' or at least outside.

Youtube videos have reputation for being fake, I wonder if this is actually true.

>The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

In the article they say:

> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.

I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.

Google tracks outclicks, so setting a lower price at first is a cheap enough SEO tactic.

Anyone know if it would be considered fraud and/or illegal to exploit this? I would consider doordash and grubhubs tactics of falsely representing themselves as restaurants to be more unethical. It would be great if someone could scale a solution that would take those arbitrage opportunities and pass them on to the drivers and the restaurants.

Yes, it's fraud.

In general, knowingly obtaining money, goods or services you know you are not entitled to is fraud/illegal.

Here's an example of someone going to jail for knowingly exploiting a glitch: https://www.inquirer.com/philly/hp/news_update/20071026_N_C_...

It seems like it would depend on who's initiating the action.

While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud, I'm not so sure "Asking the restaurant owner about their costs, then independently ordering a large number of pizzas" qualifies.

It's not your responsibility if Doordash has shit code and auditing. And given VC-onomics, it's not even clear how you would be certain this isn't "operating as intended."

> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud

Does Doordash allow customer menu modification requests? "No cheese, no tomato sauce, no onion" etc. That would also then fall under shit code and auditing :)

> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud

How so? They're making the pizzas the way the customer wants them. The 'objective' tastiness is none of the delivery middleman's business. And there's nothing wrong with offering a bad pizza for $24, as long as the customer knows what they're getting.

Well, if the restaurant reimburses the customer after, it probably would become a problem.

Way around this: private owner places his own orders as customer, pockets profits as owner. That might be legitimate - but remember: if you take legal advice from the Internet, you get what you paid for.

Why does it matter if the owner is reimbursing their non-owning customers? Restaurants do that all the time.

(IANAL) My gut says coordination would be be evidence of both (a) premeditated intent & (b) knowledge that actions constituted fraud.

One could place a personal order (or 100) innocently.

One looks substantially less innocent when coordinating with a third party to place orders and transfer money around.

While that speaks to the severity of the crime (if one were proven), as you noted, it doesn't in any way impact whether that behavior is a crime at all.

But who's defrauding who? If the doordash website says I can buy a dough pizza for $19, then doordash has to get me a dough pizza for $19 when I buy one. No fraud is happening, doordash is fulfilling the requirements of the contract they make with all their customers.

If anything, the one who's committing fraud is doordash, because they're putting in "takeout" orders with the restaurant and presenting them as "delivery" orders to the customer.

In the example from TFA, Doordash says you can buy a pizza for $16 and charges you $16. The restaurant menu price is $24, and Doordash pays $24 for the pizza. That's... the starting place. (As screwy as it is)

Now, if I order a dough pizza for $16, in coordination with the restaurant, and Doordash pays $24 to the restaurant, and the restaurant gives me a dough pizza, and then the restaurant makes it worth my while, what do we have?

Doordash has been paid $16, and spent $24 + (cost of delivery) = (-) SoftBank money

The restaurant has been paid $24 and spent ~$1 (cost of dough pizza [1]) = ~$23 profit (minus labor)

I paid $16 (let's ignore tip). The restaurant reimburses me for that (me: $0, restaurant: $7) to make it worth my while, and then splits profits with me (me: $3.50, restaurant: $3.50).

So at the end, Doordash: -$8 - delivery cost, restaurant: $3.50, me: $3.50.

It's the reimbursement of the customer that seems... suspect.

The way to ethically monetize this would be for restaurants to target Doordash misprices, and "sell" coupons (a food box, containing only a paper coupon), good for future food orders directly through the restaurants. Then encourage all their customers to buy as much as possible.

[1] We'll say we return and recycle the boxes, being environmentally conscious citizens

Getting something for cheaper because of marketing-driven pricing, wasting time dealing with empty shells you don't want, reimbursing the customer...

You have all those elements when backblaze was shucking drives en masse, but nobody would say that was fraud in any way. https://www.backblaze.com/blog/backblaze_drive_farming/

If you intentionally sell a product for cheaper than you buy it to build market share (I think it's fair to call this intentional when they process the payment and don't bother changing the listed price), and you're willing to sell a whole lot of that product to someone, you can't cry foul when someone profits off that.

What you're describing isn't fraud, it's arbitrage: buying low, selling high. Just because Doordash are a bunch of idiots for selling stuff for way less than it's worth doesn't make it illegal for me to trade with them in good faith on their own terms and profit.

Nobody's lying to anybody, no price fixing is happening, or anything. Doordash agreed to sell a product at a price to any of their users, and they are fulfilling the promise they made, end of story.

This depends on whether you think the pizza restaurant's customer is doordash.

You could make a good argument that this was the case. The restaurant sells to doordash, who paid for a pizza with toppings.

Doordash is buying it, but I think it makes more sense as "a pizza for Bob" than just "a pizza". I think it would be strange to ignore everything Bob says if he calls in asking for the pepperoni to be on one side.

Though none of this matters if there's a 'special instructions' box. Have a code word for bread pizza.

Your case is more clear cut because that is a glitch in the website. It seems that in this case Doordash is offering a promotion. Calling that fraud would be like calling taking advantage of reward points fraud.

It gets dicier when the restaurant starts shipping out plain pizza dough.

Not if the customer ordered plain pizza dough

That's not how this works. The glitch is that there's a particular menu-item mispriced by Doordash. You can't just order arbitrary things at arbitrary prices, and when the restaurant takes an order for X and delivers Y, it's taking a step towards making a material false statement to obtain something of value.

This made me wonder: what if a restaurant puts a pain dough "pizza" for $30 on their menu?

Of course, no one would order it. But in this situation, an aggregator could offer it and the restaurant owner could take advantage of that.

It smells like fraud, except that every individual step seems legitimate (albeit weird). I'm pretty sure you're allowed to charge ridiculous prices for common goods if you so choose...

It still requires the aggregator to offer it for less that $30 (at least the cost of dough less). Which, at least in this case, seems to requires a scraping error.

What restaurant doesn't allow alterations?

"I want a supreme pizza, hold the pepperoni, sausage, peppers, onions, olives, sauce, and cheese".

Meanwhile, door dash never asked for the restaurant to participate in the "promotion," so screw them... They are offering to deliver boxes of dough at deathly inflated prices, with no other agreements with the restaurant. How is taking advantage of that "service" fraud?

Exactly. That's the real problem. Even if it's just a "trial". Somehow getting a delivery number on the restaurant's listing without their knowledge or consent is abuse. Good thing they get punished for it.

It doesn't seem like fraud when they are still delivering an actual pizza; that's basically just leveraging a sale. It becomes more dubious when they aren't delivering the finished good.

The driver pays with a Doordash prepaid-reloadable card. When the driver GPS-checkins at the restaurant they're picking an item up at, the card is loaded with the exact balance the restaurant is "supposed to charge"

This mechanism reminds me of Moviepass.

This is basically the same backing service, corporate-issued "cards"

At that point door dash still thinks the pizza will cost much less, so if it's only the total the customer paid that's authorized, then how does the full cost of the order get paid?

The amount is calculated off of what DD thinks, not based on what the restaurant charges.

Yes, this causes a significant amount of driver support issues where they have to live chat in because their red card is declining.

The driver is instructed to not give the restaurant receipt to the diner.

In the article it makes clear that doordash calls the restaurant from their call center to make the order and gets the correct total verbally. Ostensibly this is what gets loaded to the delivery worker’s card.

Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.

> Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage

How would they know what percentage of orders isc coming through them?

I wonder to what extent the back end software supporting this is identical to, or similar to, what Moviepass created.

Think of something similar to https://stripe.com/issuing (Postmates apparently uses this, same industry).

Doordash's are debit mastercard, iirc.

Yes, it has been exploited exactly like you described. An example that I remember - Foodpanda in India. I guess fraud costs are massive for all the food delivery startups.

source: http://www.livemint.com/Companies/rYKC6HjnShogjE62jO5lpK/The...

That may explain why individual restaurants fare better at delivery; obviously they would catch a fraud immediately and are therefore immune to it.

From the title I expected a story of how Doordash is running a pizza arbitrage scheme. Using an expensive restaurant name, and having the drivers go to a cheap pizza place to get the pie.

Pedantically, that wouldn’t be arbitrage, it’d just be fraud. Arbitrage would involve exploiting differences in price for the same good/commodity, i.e. not substituting a different item...

>If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.

If it's trivial to launder money this way then it is a really good idea to build your own food delivery service and start doing all sorts of money laundering through it.

> Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less

Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.

>does anyone actually order franchise pizza on an app

I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely start the order over from scratch if we change our plan mid-way. It would be rude to hold someone on the phone for that. Plus the app gives better real-time update on the status of my order. I know when it leaves the oven, when it gets picked up by the driver, etc.

I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone.

I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?

You may be right, and if so then I agree that it doesn't make sense to order PJ's, Domino's, or Pizza Hut through a generic app. My (perhaps incorrect) interpretation was based on the fact that I've never seen one of the big chains available in the generic delivery apps.

In the UK the three big pizza chains (Dominos, Papa Johns, Pizza Hut) are on the two big delivery apps (Uber Eats, Deliveroo). I’ve never ordered any of them via it for reasons outlined upthread, with the additional reason that not only is delivery more expensive the chain-specific voucher codes are not available.

> In the UK the three big pizza chains (Dominos, Papa Johns, Pizza Hut)

I don't know why but I am saddened by this. I mean, even in the UK they are the biggest?

Yeah, and big chain apps and mobile sites, while not amazing at times, all work pretty well now.

Outside of a few odd situations now and then, most big chain apps (if they typically take mobile type orders) .. offer a competent experience.

Other benefit is if you sing up for some "club" or email list you'll often get a coupon or etc.

> I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?

Papa Johns is listed on Deliveroo. I often order PJs through Deliveroo when I'm hungry and don't want to think too much.

It costs more in money, it costs less in cognitive load. I know what I'm getting as far as the food is concerned, PJs is remarkably consistent, and I don't need to bother signing up for a new account with someone, working out payment details, etc.

You'd be surprised how many people like myself exist. Not everyone has every aspect of their financial life fully optimised. This is one area where I definitely have room for improvement.

In the mean time, Deliveroo ensures that when I'm exhausted at the end of a long week, I'm only a few clicks away from repeating my last PJs order and my Friday lunch pizza will arrive with minimal effort.

Not sure how Deliveroo works. But I would think the issue here is you may miss out on coupons, promotions and deals chains like Papa Johns usually have. If we say saving yourself 5 bucks using a promo code on a weekly ordered pizza, on a yearly basis this comes out to almost 300/year of savings.