Doorman, founded in 2013, offered scheduled package deliveries, catering to customers who couldn't wait for deliveries. The startup gained traction, even appearing on "Shark Tank." However, financial struggles due to unsustainable subscription plans led to its shutdown in 2017, despite attempts to raise prices.
What was Doorman
Doorman's main product was a package delivery service that ensured timely deliveries at the user's convenience. Its unique value proposition was the flexibility of scheduled deliveries. Notable achievements include raising $1.75 million in funding and being featured in CB Insights' Supply Chain & Logistics Tech and On-Demand expert collections.
Reasons behind Doorman's Failure
Unsustainable Financial Losses Doorman's business model, while initially popular, led to significant financial losses. Founder and CEO Zander Adell noted, "We didn’t expect that Doorman would completely change peoples’ shopping behavior." The original pricing plans of $19 and $29 per month were unsustainable, causing the company to lose money on many customers.
Drastic Price Increase In an attempt to mitigate financial losses, Doorman raised its subscription prices to $89 per month. This significant price hike likely led to customer attrition, as the new rates were much higher than the original plans. The sudden increase alienated many users who had grown accustomed to the lower prices.
Operational Challenges Despite changes in pricing and service structure, Doorman struggled to maintain a profitable business model. The company faced operational challenges that it couldn't overcome, leading to the decision to cease operations by October 6, 2017. The inability to adapt effectively to market demands and financial constraints ultimately sealed its fate.
Impact on Investors and Market
Doorman's shutdown left investors grappling with the loss of their $1.75 million investment. The market saw a gap in scheduled delivery services, impacting competitors like Parcel Pending and BufferBox. Despite hints of a potential partnership, the closure underscored the challenges in sustaining innovative logistics models.
Lessons Learned from Doorman's Failure
Understand Market Dynamics: Thoroughly research and adapt to changing market demands to avoid unsustainable business models.
Pricing Strategy: Ensure pricing plans are sustainable and reflect the true cost of service delivery to maintain profitability.
Customer Retention: Avoid drastic price hikes that can alienate loyal customers and lead to significant attrition.
Operational Efficiency: Streamline operations to handle growth and market demands effectively, ensuring long-term viability.
Financial Planning: Maintain robust financial planning to anticipate and mitigate potential losses, ensuring business sustainability.
Adaptability: Stay flexible and ready to pivot strategies in response to financial and operational challenges.
Frequently Asked Questions about Doorman
When was Doorman founded?
Doorman was founded in 2015 and gained attention by appearing on ABC's "Shark Tank."
What were the key features of Doorman's service?
Doorman offered scheduled package deliveries and monthly subscription plans, initially priced at $19 and $29 per month.
Why did Doorman fail?
Doorman failed due to unsustainable financial losses, increased costs, and an inability to adapt to market demands.
Looking Ahead
As startup founders navigate the challenging landscape of entrepreneurship, it's crucial to learn from past failures and plan for a sustainable future. If you're facing the difficult decision to wind down your startup, consider how Sunset can help you avoid similar pitfalls. Sunset handles all the legal, tax, and operational burdens, allowing you to avoid penalties, reduce liabilities, and move on to your next venture seamlessly.
