Connect with us

Finance

How DoorDash Uses Analytics and Forecasting Amid Economic Uncertainty

Published

on

How DoorDash Uses Analytics and Forecasting Amid Economic Uncertainty

DoorDash Inc.

is working to step up its analytics and talent to forecast the slowing economic system’s impact on future earnings, in a transfer to broaden the enterprise and enhance the effectivity of its divisions. 

Meals-delivery firms are grappling with hovering inflation that’s weighing on shoppers’ spending energy and experiencing slower progress than throughout the pandemic. San Francisco-based DoorDash in February stated its internet loss widened to $1.37 billion in 2022 from $468 million a yr earlier, partially attributable to $312 million in impairment expenses. Its income rose 35% to $6.58 billion in 2022 from the earlier yr. 

However DoorDash—which delivers meals and different objects from eating places, supermarkets and comfort shops—is optimistic about its progress. The corporate says it expects $500 million to $800 million in adjusted earnings earlier than curiosity, taxes, depreciation and amortization this yr partially attributable to sturdy client demand, up from $361 million in adjusted Ebitda final yr. 

The corporate is taking a better have a look at information evaluation in areas corresponding to pricing and order sizes, as guided by an almost 200-person analytics staff led by Jessica Lachs, DoorDash’s vp of analytics and information science. A few of the analytics staff’s findings are additive to adjusted Ebitda, however the outcomes are depending on a number of groups, a spokesman stated. 

Advertisement

That is occurring because the oversight of DoorDash’s funds not too long ago modified arms.

Ravi Inukonda,

the corporate’s vp of finance, grew to become its new chief monetary officer efficient March 1, succeeding

Prabir Adarkar,

who’s now president and chief working officer. 

Advertisement

Jessica Lachs, vp of analytics and information science at DoorDash Inc.



Photograph:

DoorDash Inc.

WSJ’s CFO Journal talked to Ms. Lachs, who reviews to Mr. Inukonda, about how analytics help DoorDash’s monetary operations, notably at a time of excessive financial uncertainty. Her responses have been edited for size and readability. 

WSJ: How do you see analytics equivalent to the finance perform?

Ms. Lachs: It’s all about our want to measure as a lot as attainable. After we roll out a brand new product function or program to clients, we will run an experiment and really quantify the true affect that it had on the enterprise and all of these issues can then get included into our forecast. These options vary from in-app adjustments like a brand new carousel on the house web page to the efficiency of recent machine studying algorithms to our launch of the pickup map within the DoorDash app. By understanding what we’re seeing within the information, we will make higher funding choices. 

WSJ: Is the slowing economic system affecting the corporate’s method to forecasting?

Advertisement

Ms. Lachs: We’re protecting a watchful eye on every thing that’s occurring out there, notably because it pertains to inflation and client softening. A cool factor that we did that empowers our CFO to make good choices is by constructing out what we name the DoorDash merchandise value index. We’ve got our personal inner value index that tracks and measures adjustments within the common merchandise value on the platform weekly. The index makes use of the preferred service provider objects ordered on the platform. We monitor in opposition to the U.S. consumer-price index on a month-to-month foundation to grasp if costs on our platform are rising at an accelerated fee in comparison with [the] total costs within the economic system. 

We’re monitoring value indices on fastened and floating baselines so as to present {the marketplace}’s well being from completely different factors of views. The fixed-weight index exhibits value adjustments which might be unbiased of adjustments in client selection. The fixed-weight index will keep flat if retailers don’t replace costs. The floating-weight index exhibits value adjustments with the affect of client selection. It will possibly change both attributable to service provider value updates or client buy shifts.

WSJ: What’s the floating-weight value index exhibiting you? 

Ms. Lachs: Customers are ordering fewer objects per cart. However apparently, they’re protecting higher-priced objects. It is smart as a result of they’re extra prone to be an entrée. As the place you possibly had ordered an entrée and a facet, now you’re simply protecting the entrée. Or, when you had ordered an appetizer, two entrees and dessert, possibly you’re not going to order dessert now.

We’re watching these indices and the way they monitor to the broader CPI like a hawk as a result of we need to ensure that any pattern break we see we will incorporate into our forecasts. The web outcome from what we’re seeing was a slight enhance in subtotals, and we included that into our forecast as a result of that’s one thing that we count on to proceed. 

WSJ: Do you’ve a cost-savings goal related together with your analytics effort? 

Ms. Lachs: Our aim isn’t particular to financial savings. We can have a aim on financial savings that we’d need to get by way of high quality enhancements, for instance. By having greater high quality on the platform and decreasing defects, that ends in much less credit and refunds, which clearly has a constructive affect on margins. So that could be one thing that we set a aim for. The groups throughout product, operations, engineering and analytics can have that aim. After which it’s analytics’ accountability to establish the important thing drivers of defects, to actually perceive what’s occurring on the platform in order that we will work out the massive alternatives for us to enhance high quality so we will hit regardless of the aim is that we’ve set on decreasing price. 

The analytics staff’s position is somewhat bit extra concerning the intelligence that we offer for the groups, the alternatives that we’re in a position to establish and the estimated sizings primarily based on the entire issues we’ve quantified through the years on what we should always count on. 

Advertisement

If we have to get $10 million of financial savings in a single specific space, what’s that going to include? Perhaps it’s going to be 5 completely different initiatives, a few of which get us $2 million and a few of which give us $3 million. The analytics staff, particularly the data-science staff, goes to run the experiments that quantify the affect of the adjustments we’re making so we all know which initiatives have been on the right track and which exceed expectations. 

WSJ: Are there current examples of analytics serving to to make a specific enterprise line extra worthwhile?

Ms. Lachs: The experimentation the analytics staff has accomplished to assist develop our grocery enterprise is well timed. The analytics staff discovered that making certain an merchandise is in inventory and obtainable on the DoorDash platform is extra essential for client retention than offering a superb substitution. This led to a number of work streams to enhance stock administration for the grocery enterprise. The staff additionally ran some assessments that resulted in elevated basket sizes, which is a driver of profitability within the grocery enterprise. 

WSJ: Does the current CFO swap have any impact in your work? 

Ms. Lachs: The adjustments in management actually have been a pure evolution and I’ve labored intently with Prabir and Ravi for fairly a while. The intelligence that we offer we have been already exhibiting to Ravi in his prior position, so I don’t assume that something will change. 

Advertisement

Write to Mark Maurer at mark.maurer@wsj.com

Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Finance

Islamic finance: a powerful solution for climate action – Greenpeace International

Published

on

Islamic finance: a powerful solution for climate action – Greenpeace International

Across the globe, Muslim communities find themselves disproportionately affected by climate change, with extreme weather events, rising food insecurity, and other climate impacts taking a toll on their livelihoods, cultural practices, and spiritual life. 

In the last few years, devastating floods swept through Pakistan, affecting millions, displacing thousands, and leaving entire communities struggling to rebuild. In Indonesia, one of the world’s most populous Muslim-majority countries, rising sea levels threaten to submerge coastal villages and erode vital agricultural lands. Meanwhile, in parts of the Middle East and North Africa, persistent droughts and water scarcity are increasing pressures on already fragile ecosystems and economies.

Pakistan’s 2022 monsoonal floods affected 33 million people across the country and claimed more than 1730 lives. Climate change has been identified as a contributing factor to the increasing frequency and severity of floods in Pakistan.

The climate crisis is having a profound impact on the daily lives and religious practices of millions of people

These climate pressures extend beyond immediate threats to survival. Climate change has also begun affecting food security in Muslim-majority regions, especially during Ramadan, a holy month where fasting is practised from dawn until dusk. In communities already grappling with the impacts of droughts or floods, maintaining food stocks for Ramadan can become a significant challenge. In Somalia, where cycles of drought and flash floods have eroded food systems, many families are forced to navigate long-standing shortages, with climate-induced shocks compounding existing vulnerabilities.

August 2019: A member of Greenpeace Indonesia’s Forest Fire Prevention (FFP) team holds a carbon monoxide meter as Muslims attend Idul Adha prayers at Darussalam Mosque. Haze from forest fires blankets the area in Palangkaraya City, Central Kalimantan, Indonesia. High atmospheric carbon dioxide levels, combined with deforestation-induced dry conditions, further exacerbate these fires. © Ulet Ifansasti / Greenpeace

Food insecurity is a worsening crisis as global warming affects harvests, disrupts fisheries, and drives up food prices, making the observance of Ramadan particularly strenuous, both physically and economically. This brings climate change into the daily lives and religious practices of millions in profound ways, reminding us that the climate crisis is as much a social and economic issue as it is an environmental one.

Islamic finance: a financial system grounded in ethical responsibility

Islamic finance has been operating in the global financial system for decades, providing an ethical foundation rooted in Islamic principles that promote fairness, social responsibility, and environmental stewardship.

Advertisement
Islamic Social Finance for Climate Action at COP 28 in Dubai. © Marie Jacquemin / Greenpeace
December 2023, COP28: An Islamic Social Finance For Climate Action event co-hosted by UNHCR and Greenpeace MENA (as part of the Ummah for Earth Alliance) explored the critical role of Islamic Social Finance in addressing global humanitarian and climate challenges. © Marie Jacquemin / Greenpeace

Ethical banking is a core pillar of Islamic finance. Through principles like zakat (charity) and waqf (endowment for public good), Islamic finance encourages financial activity that uplifts communities, supports sustainable projects, and avoids investments in industries harmful to people and the planet. 

Many Islamic financial institutions in countries like Malaysia, the United Arab Emirates, and Saudi Arabia already support projects aimed at protecting the environment and enhancing social welfare. Success stories are already emerging. Malaysia’s green sukuk initiative has mobilised billions for renewable energy projects, while the UAE’s recent US$3.9 billion in green sukuk issuance demonstrates growing momentum. Saudi Arabia’s Vision 2030 has allocated US$50 billion for renewable initiatives, targeting an emissions reduction of 278 million tons by 2030. 

A US$400 billion opportunity for climate action

While Islamic finance principles already provide a framework that aligns well with sustainability, there is still much room to strengthen its role in addressing the climate crisis, enhancing resilience in vulnerable communities, and shifting investments towards clean, renewable energy.

A new report by Greenpeace Middle East & North Africa (MENA) (as part of the Ummah For Earth Alliance) and the Global Ethical Finance Initiative (GEFI), highlights the transformative potential of Islamic finance in accelerating the global transition to renewable energy and addressing the triple planetary crisis: climate change, pollution, and biodiversity loss.

The report shows that the Islamic finance industry continues its robust expansion, with assets projected to reach USD$ 6.7 trillion by 2027, and that a strategic allocation of just 5% toward renewable energy and energy efficiency initiatives could mobilise approximately USD$ 400 billion by 2030 – a transformative sum for climate-vulnerable regions.

In the build up to COP26, in October 2021, the Ummah for Earth alliance delivered a message to world leaders through a projection on the Glasgow Central Mosque close to the conference venue. The coalition solarised the Glasgow central mosque with around 120 solar panels. © Ummah For Earth / Greenpeace MENA
In the build up to COP26, in October 2021, the Ummah for Earth alliance delivered a message to world leaders through a projection on the Glasgow Central Mosque close to the conference venue. The coalition solarised the Glasgow central mosque with around 120 solar panels. © Ummah For Earth / Greenpeace MENA

Islamic finance can help foster climate-resilient infrastructure, restore and protect biodiversity, and finance climate adaptation projects in at-risk communities. By explicitly directing funds away from fossil fuels and into green energy projects, Islamic financial institutions like the Islamic Development Bank (IsDB) can lead by example, especially in regions that are both vulnerable to climate impacts and hold significant influence in the global fossil fuel market. These institutions must accelerate their commitment to renewable energy investments.

As climate impacts intensify, Islamic finance offers a bridge between faith-based values and practical climate solutions. The convergence of Islamic finance and climate action represents more than a financial opportunity – it’s a moral imperative aligned with Islamic principles of environmental stewardship (khalifah) and balance (mizan).

Advertisement

Islamic finance, grounded in ethical principles and community responsibility, has a unique role to play in the global climate movement, particularly in the Global South. For millions across the globe, this form of finance offers a culturally relevant and powerful instrument to not only protect their communities from the worsening climate crisis but to promote environmental and economic sustainability in ways that align with their beliefs. Islamic finance offers a bridge between economic strength and ethical stewardship, creating pathways toward a more equitable and sustainable world for all.

November 2024 - Islamic Finance & Renewable Energy Greenpeace MENA (member of the Ummah For Earth alliance), GEFI

Your voice can transform Islamic fiance

Ask your Islamic bank to support increasing investments in renewable energy!

Take action

Advertisement
Continue Reading

Finance

COP29: Trillions Of Dollars To Be Mobilized For Climate Finance

Published

on

COP29: Trillions Of Dollars To Be Mobilized For Climate Finance

World leaders are gathered in Baku, Azerbaijan, for the COP 29 on Climate Change. As the conference enters its final day tomorrow, the atmosphere is charged with anticipation. Will the leaders be able to conclude discussions on critical issues?

A document released by the UN this morning hints at progress in discussions on climate finance: while the exact figure remains undisclosed, it is mentioned that it will be in trillions of dollars. The decision on trillions of dollars is a positive step, as many experts have expressed concerns that a few billion dollars will be insufficient and will fall short of necessary action to address the urgency of climate change.

By the end of COP 29 , the world will hopefully get a new number. A lot has gone into deciding this number: 12 technical consultations and three high-level ministerial meetings. The final leg of the consultations is happening in Baku. It is worthwhile to take a look at the key items that came out of the draft document on finance today and the discussions that led to those decisions. Much of this document can be expected to feed into the final decision that comes out of COP 29.

Advertisement

A Decision On Trillions Of Dollars – The Quantum

What is a good number for a finance goal? Should the number be in billions or trillions? The draft text released today mentions that the amount will be in trillions. Although the exact number is unspecified.

One of the key outcomes expected from this year’s COP is this exact number which will become the new collective quantified goal, popularly referred to as NCQG. There is a high expectation that countries will be able to reach a consensus on a quantified number, which can be the North star to mobilize funds to address the urgency of climate change. It was during the COP in Copenhagen in 2009 that the earlier goal of mobilizing 100 billion per year was decied– an amount pledged by developed countries to support developing countries in addressing climate change by 2020. There are questions about whether that target was successfully met, with views from some countries that it was not met. The decision that came out today relfects this disagreement.

A few billion dollars would be unacceptable, according to Illiari Aragon, a specialist in UN Climate Negotiations, who has closely followed NCQG negotiations since they started. Many developing countries would be unsatisfied if a number of billions were proposed. In earlier talks, some numbers in billions were also floating around. Most estimations however point towards trillions. A number of at least 5 trillion, was estimated as being needed based on the Standard Committee of Finance of the United Nations as part of an assessment of needs proposed by countries in their Nationally Determined Contribution.

A Decision On The Contributor Base And Mandatory Obligations

Another key topic of discussion has been who contributes to the financial goal that comes out of COP 29. Some developed countries suggested expanding the donor base to also include countries like China and India. However, that was an unacceptable proposition, with media from India, based on interviews with experts, particularly reporting it would be unacceptable.

Advertisement

The new text released today goes away from the mandatory approach and adds flexibility to better reflect needs of developed and developing countries. The text states that it invites developing country Parties willing to contribute to the support mobilized to developing countries to do so voluntarily, with the condition that this voluntary contribution will not be included in the NCQG.

The document released today also states that it has been decided that there will be minimum allocation floors for the Least Developing Countries and Small Island developing countries of at least USD 220 billion and at least USD 39 billion, respectively. Deciding such a minimum allocation floor is a big step as these countries are particularly vulnerable to the extreme impacts of climate change. In March 2023, Malawi, in the African continent, was devastated by a tropical cyclone. Africa, according to some estimates, contributes to only 4% of global warming, but is particularly vulnerable to climate cahnge.

Some Decisions On Structure- What should be included?

The question regarding what types of finance will be classified as finance has been a key topic of discussion. The type of finance is crucial because it determines what kind of finance can really be aggregated to reach the big quantum goal.

In the negotiations so far, some countries suggested requiring funds to be channeled from the private sector as well. However, some parties questioned whether the private sector could be obligated to contribute to a goal and be made accountable for this goal. There were also discussion on grants versus loans. Many countries called for more grants and financing with higher concessional rates, reducing the repayment burden.

The document that came out today clarified both the above concerns. It states that the new collective quantified goal on climate finance will be mobilized through various sources, including public, private, innovative and alternative sources, noting the significant role of public funds. The decision to include the private sector is a significant step, as it provides an entry door for the private sector to be more actively involved in climate action. On grants and loans, the decision text states that a reasonable amount will be fixed in grants to developing countries, with significant progression in the provision. The decision on this allocation floor for grants, is also an essential consideration as it helps these countries to avoid being tied up in debt.

Advertisement

The decisions on climate finance published today during COP 29, which will act feed into the final decisions from COP 29, can add significant momentum to what is available for climate finance and action. They can also help build trust among many vulnerable countries in the power of multilateral decision-making process, showing that the world is indeed united in addressing global warming.

Continue Reading

Finance

Unlocking Opportunities in the Age of Digital Finance

Published

on

Unlocking Opportunities in the Age of Digital Finance

Emerging technologies like big data, AI and blockchain are reshaping finance. New products, such as platform finance, peer-to-peer lending and robo-advisory services, are examples of this transformation. These developments raise important questions: How concerned should traditional financial institutions be? What strategies can fintech and “techfin” (technology companies that move into financial services) disruptors adopt to secure their place in this evolving landscape?

There are two main threats to the traditional finance industry. The first comes from fintech companies. These firms offer specialised services, such as cryptocurrency-trading platforms like Robinhood or currency exchange services like Wise. Their strength lies in solving problems that traditional banks and wealth managers have yet to address or have chosen not to address given their cost and risk implications.

The second threat comes from techfin giants like Alibaba, Tencent and Google. These companies already have vast ecosystems of clients. They aren’t just offering new technology – they are providing financial services that compete directly with traditional banks. By leveraging their existing customer bases, they are gaining ground in the financial sector.

A common problem for traditional players is their belief that technology is simply a tool for improving efficiency. Banks often adopt digital solutions to compete with fintech and techfin firms, thinking that faster or cheaper services will suffice. However, this approach is flawed. It’s like putting an old product in new packaging. These disruptors aren’t just offering faster services – they’re solving needs that traditional banks are overlooking.

Evolving client expectations

Advertisement

One area where traditional players have fallen short is meeting the needs of investors who can’t afford the high entry costs set by banks. Fintech and techfin companies have successfully targeted these overlooked groups.

A prime example is Alibaba’s Yu’e Bao. It revolutionised stock market participation for millions of retail investors in China. Traditional banks set high transaction thresholds, effectively shutting out smaller investors. Yu’e Bao, however, saw the potential of pooling the contributions of millions of small investors. This approach allowed them to create a massive fund that allowed these individuals to access the markets. Traditional banks had missed this opportunity. The equivalent of Alibaba’s Yu’e Bao in a decentralised ecosystem is robo-advisors, which create financial inclusion for otherwise neglected retail investors. 

These examples show that disruptors aren’t just using new technologies. They are changing the game entirely. By rethinking how financial services are delivered, fintech and techfin firms are offering access, flexibility and affordability in ways traditional institutions have not.

What can traditional players do?

For traditional financial institutions to remain competitive, they need to change their strategies. First, they should consider slimming down. The era of universal banks that try to do everything is over. Customers no longer want one-stop-shops – they seek tailored solutions.

Advertisement

Second, instead of offering only their own products, banks could bundle them with those of other providers. By acting more as advisors than product pushers, they can add value to clients. Rather than compete directly with fintech or techfin firms, banks could collaborate with them. Offering a diverse range of solutions would build trust with clients. 

Finally, banks must stop demanding exclusivity from clients. Today’s customers prefer a multi-channel approach. They want the freedom to select from a variety of services across different platforms. Banks need to stop “locking in” clients with high exit fees and transaction costs. Instead, they should retain clients by offering real value. When clients feel free to come and go, they are more likely to stay because they know they’re receiving unbiased advice and products that meet their needs.

This would require taking an “open-platform” approach that focuses more on pulling customers in because they are attracted by the benefits of the ecosystem than locking them in or gating their exit. It is akin to Microsoft’s switch from a closed-source to an open-source model.

Do fintech and techfin have the winning formula?

While traditional players face their own challenges, fintech and techfin companies must also stay sharp. Though they excel at creating niche services, these disruptors often lack a broader understanding of the financial ecosystem. Many fintech and techfin firms are highly specialised. They know their products well, but they may not fully understand their competition or how to position themselves in the larger market.

Advertisement

For these disruptors, the key to long-term success lies in collaboration. By learning more about traditional players – and even partnering with them – fintech and techfin companies can position themselves for sustainable growth. Whether through alliances or by filling service gaps in traditional banks, fintech and techfin firms can benefit from a better understanding of their competitors and partners.

Learning from disruption

In a world of rapid technological change, financial professionals are seeking structured ways to navigate this evolving landscape. Programmes like INSEAD’s Strategic Management in Banking (SMB) offer a mix of theory and practical experience, helping participants understand current trends in the industry.

For example, SMB includes simulations that reflect real-world challenges. In one, participants work through a risk-management scenario using quantitative tools. In another, they engage in a leadership simulation that focuses on asking the right questions and understanding the numbers behind a buy-over deal. These experiences help bridge the gap between theoretical knowledge and practical application.

Equally important are the networks built through such programmes. With participants coming from traditional banks, fintech and techfin firms, the environment encourages collaboration and mutual understanding – both of which are crucial in today’s interconnected financial world.

Advertisement

The next big wave in finance

Looking ahead, the next wave of disruption is unlikely to come from more advanced technology. Instead, it will likely stem from changing relationships between banks and their clients. The competitive advantage of traditional institutions will not come from technology alone. While price efficiencies are necessary, they are not enough.

What will set successful banks apart is their ability to connect with clients on a deeper level. Technology may speed up transactions, but it cannot replace the trust and human connection that are central to financial services. As behavioural finance continues to grow in importance, banks can move beyond managing money to managing client behaviour. Helping clients overcome biases that hinder their financial decisions will be key.

In the end, it’s not just about how fast or how efficient your services are. The future of finance lies in blending innovation with the timeless principles of trust, advice and human insight. Both traditional players and disruptors will need to find that balance if they hope to thrive in this new era.

Advertisement
Continue Reading
Advertisement

Trending