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Doorman Shark Tank: Rise and Fall of a Promising Startup

In the fast-paced world of e-commerce, the delivery industry faces numerous challenges. One startup that aimed to revolutionize the last-mile delivery experience was Doorman. Founded by Zander Adell in 2013, Doorman sought to solve the problem of missed package deliveries by offering a convenient scheduling service.


The company gained significant attention after appearing on ABC's hit show "Shark Tank" in 2015.

However, despite initial success, Doorman struggled to sustain its business model and ultimately shut down on October 6th, 2017.

In this article, we will explore the rise and fall of Doorman, examining the reasons behind its failure and the lessons that can be learned from its story.

Doorman App: Reinventing Package Delivery


Doorman entered the market with a unique proposition - to provide a solution to the problem of missed package deliveries in densely populated urban areas. The company managed and operated fulfillment centers and independent driver fleets, bridging the gap between online retailers and customers. To utilize the Doorman app, customers would have their online purchases shipped to a local Doorman warehouse. They could then use the app to schedule an evening delivery within a one or two-hour window of their choice. This service aimed to address the inconvenience and security risks associated with traditional package deliveries.


Doorman Shark Tank

Doorman's Appearance on Shark Tank


In January 2015, Doorman received a significant boost when the company appeared on ABC's "Shark Tank". Zander Adell, the CEO of Doorman, pitched his business to the sharks, seeking a $250,000 investment for a 10% stake in the company. After negotiations, Robert Herjavec agreed to invest $250,000 in exchange for a 12% stake. The exposure from "Shark Tank" propelled Doorman's business to new heights, attracting attention from investors and expanding its operations to new cities.


Growth and Expansion of Doorman


Following its appearance on "Shark Tank," Doorman experienced a surge in demand. The company successfully raised $1.5 million in a seed funding round in June 2015, led by Motus Ventures. With this funding, Doorman expanded its operations to two new cities, Chicago and New York City, in October and November of the same year.


Alongside geographic expansion, Doorman also diversified its services. The company began offering same-day package delivery and pick-up services for returns. Doorman also forged partnerships with e-commerce brands, providing them with direct-to-consumer fulfillment services.


Doorman's Downfall and Failure


Despite its initial success and expansion, Doorman's business model began to show cracks. One of the primary reasons for Doorman's failure was its focus on a business-to-consumer (B2C) model. Unlike other delivery startups that generated additional revenue from retailers or restaurants, Doorman charged consumers directly for its services. This approach proved challenging as customers had become accustomed to free or low-cost shipping options offered by major e-commerce platforms like Amazon. The pricing structure of Doorman, including the unlimited delivery subscription, did not resonate with consumers, leading to a lack of willingness to pay for the service.


Another critical mistake made by Doorman was its failure to prioritize density in its operations. Delivery businesses thrive on high-density routes, where the number of delivery stops per hour is maximized, reducing the cost per delivery. However, Doorman allowed customers to choose narrow delivery windows, even during times of low demand, which negatively impacted route efficiency and increased delivery costs. This lack of density ultimately contributed to the company's financial difficulties.


Furthermore, Doorman's pricing model did not accurately reflect the actual cost of delivery. The company initially offered unlimited delivery subscriptions at low prices, underestimating the impact on delivery costs when customers doubled their online purchases. To address this issue, Doorman increased its prices and capped the number of deliveries per subscription. However, even with these changes, the fee per delivery did not cover the true cost of delivery. The company relied on the hope that increased subscriber growth would lead to improved delivery density and lower costs, but this bet did not pay off.


Lessons Learned: Building a Sustainable Business


The rise and fall of Doorman offer valuable lessons for startups and entrepreneurs looking to build a sustainable business in the delivery industry. Here are three key takeaways:


1. Consider the Business-to-Business (B2B) Approach


Doorman's B2C model proved challenging, as consumers were hesitant to pay for delivery services. Instead, startups in the delivery space should consider working directly with retailers or other businesses, offering last-mile delivery solutions as part of a broader service. By targeting retailers and charging them for the service, delivery startups can establish a more sustainable revenue stream.


2. Prioritize Density for Cost Efficiency


High-density routes are crucial for achieving profitability in the delivery business. Startups should focus on maximizing the number of delivery stops per hour, reducing the cost per delivery. By implementing dynamic pricing algorithms or surge delivery fees during hours of low density, startups can encourage customers to choose more cost-effective delivery windows, increasing density and reducing costs.


3. Build a Pricing Model Based on Unit Economics


It is essential to develop a pricing model that accurately reflects the true cost of delivery. Startups should not rely on highly subsidized rates or bet on future growth to cover costs. Instead, pricing should be based on the actual cost of each delivery, ensuring profitability from the start.


Wrapping Up


While Doorman's story serves as a cautionary tale, the last mile delivery industry continues to evolve. Startups and established players alike are exploring innovative solutions to address the challenges faced by consumers and businesses. By learning from the mistakes of Doorman and implementing sound business strategies, entrepreneurs can build sustainable and successful businesses in the delivery space.


The demise of Doorman serves as a reminder that a strong business model, pricing accuracy, and a focus on customer needs are essential for long-term success in the ever-changing world of e-commerce and package delivery.


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