In a move to both grow its subscription program and capture consumers’ holiday spending, DoorDash has made its DashPass delivery subscription giftable.
The aggregator announced Monday (Nov. 21) the option for consumers to purchase three-, six- or 12-month memberships for others to be sent via email.
The effort to grow subscriptions comes as the aggregator counts on DashPass to drive enough sales at scale to offset the high cost of delivery. On a call with analysts earlier this month discussing the company’s third-quarter earnings results, Chief Financial Officer Prabir Adarkar said that the company has no intentions to raise the price of its DashPass membership anytime soon and that the unit economics of the subscription program “work fine” at the current rate.
“I view an increase in subscription fee or DashPass as being something that would actually slow down the pace of DashPass adoption, which we’ve been very happy with so far,” Adarkar said. “It continues to remain the largest paid membership program in the food category. We’ve hit record highs in terms of our DashPass subscribers.”
Additionally, gifting has been proving a valuable source of margin growth for food and beverage (F&B) businesses. Starbucks, for instance, the world’s largest restaurant chain by revenue, reportedly claimed $181 million in revenue from money on gift cards and loyalty accounts that customers didn’t spend in fiscal year 2021. This figure accounted for about 1% of sales and 4.3% of net income during the year.
The launch could also help the aggregator gain share from competitors. Uber One and Grubhub+ do not offer a comparable gifting option, such that consumers interested in such a gift only have one aggregator to turn to, a useful advantage when, in many ways, leading aggregators’ membership programs can be more or less interchangeable.
Yet, many consumers are actually paring back their spending on gifts this holiday season, according to data from PYMNTS’ study “New Reality Check: The Paycheck-to-Paycheck Report — The Holiday Shopping Edition,” created in collaboration with LendingClub.
The study, which drew from a survey of more than 3,400 United States consumers, found that 15 million consumers who shopped for gifts in 2021 will not be doing so this year. Specifically, 79% of respondents said they would shop for the 2022 holiday season, a significant dip from the 88% who did so last year.
“It’s such a sad statistic that came out of this report,” LendingClub Financial Health Officer Anuj Nayar told PYMNTS in an interview. “That means people are not buying gifts, many for the first time.”
Moreover, many consumers are cutting back on their restaurant spending specifically during the holiday season. The study found that 29% said they would spend less on restaurant dining this season than they did in 2021, while only 22% said they would spend more.
Plus, gift cards have not caught on in the restaurant industry. Research from PYMNTS’ August report, “How Consumers Perceive Surcharge Prompts,” created in collaboration with Payroc, which drew from a survey of more than 2,800 U.S. credit card users, found that fewer than one in 40 restaurant purchases are paid for via gift card. Granted, the DashPass subscription offers an ongoing service rather than a one-off purchase, but the aggregator may nonetheless have an uphill battle driving adoption.