It’s happening! DoorDash has added alcohol delivery, which means they are breaking into the same markets as Instacart to create tighter competition. Who will follow their lead? Meanwhile, Uber is looking to turn a profit this quarter while also rolling out pension plans to their UK drivers. All this and more in this week’s roundup with senior RSG contributor Paula Gibbins.
DoorDash Expands Marketplace Offering with Alcohol On-Demand (DoorDash)
Summary: Customers across 20 states and the District of Columbia can now order wine, beer, or spirits for on-demand delivery or pickup from thousands of restaurants, grocery stores, and retailers
Also available in Canada and Australia, reaching over 100 million adults worldwide
DoorDash announced today it is facilitating the delivery of beer, wine, and spirits via the DoorDash Marketplace, across 20 states and the District of Columbia, as well as in Canada and Australia, reaching over 100 million customers worldwide. Customers in select markets, where legally permissible, can toggle to the Alcohol tab of the DoorDash app to browse and safely order from a wide selection of drinks from restaurants, grocery stores, local retailers, and convenience stores. This news follows a multi-year journey of fulfilling alcohol on-demand delivery for many national and local merchants via their own channels with DoorDash Drive, DoorDash’s white-label fulfillment service.
My Take: This won’t be the end of it. I think pretty soon it’ll be hard to differentiate between Uber Eats, DoorDash and Instacart. They’ll all provide grocery, alcohol, convenience store and restaurant deliveries. The only difference will be which market each has deeper roots in.
Instacart shopper activist group asks customers to delete the app until demands for better conditions are met (TechCrunch)
Summary: Yesterday, the Gig Workers Collective — representing a body of about 13,000 Instacart shoppers — launched a #DeleteInstacart campaign, urging customers to delete the Instacart app as a show of solidarity with workers advocating for better treatment. The collective of shoppers asked that customers refrain from reinstalling the app until five demands are met. They are asking to be paid by individual order, not by a batch of orders; to re-introduce item-based commissions; to ensure the rating system doesn’t punish shoppers for issues beyond their control; to provide occupational death benefits; and to make the default tip at least 10%, up from the current 5% default.
“We’re deeply committed to creating the best possible experience for our shopper community. Over the past several years, this unwavering commitment has led us to introduce new features, policies, offerings, and support for shoppers — significantly improving the shopper experience and resulting in the highest shopper sentiment in company history. During the COVID-19 pandemic, we’ve invested in countless new measures to support the health and safety of the shopper community. We take shopper feedback very seriously and remain committed to listening to and using that feedback to improve their experience,” Instacart said in a statement provided to TechCrunch.
Instacart has 500,000 independent contractors working as shoppers, the company said, up from 200,000 before a pandemic-driven hiring spree. The company told TechCrunch that its payment structure has not changed since February 2019. That month, the company faced a class-action lawsuit over its practice of subsidizing wages with tips — Instacart had previously instituted a $10 earning minimum per order, but on small orders that totaled less than $10, customer tips would subsidize the rest of the cost (so, if a customer bought $8 of food and tipped $3, the shopper would receive $10 plus $1 in tip, rather than the $10 minimum plus a $3 tip). Former CEO Apoorva Mehta wrote an apology to shoppers and affirmed that tips should always be separate from employee compensation, and Instacart retroactively compensated shoppers whose tips were included in minimums….
My Take: I definitely have a soft spot for Instacart shoppers. I personally hate shopping, so to have someone else do it but only make $7 or $10 on my order seems ridiculous…even more ridiculous if it is batched with someone else’s order and they still only receive the $7 total for the two.
I am perfectly fine with putting away Instacart until the workers’ needs and demands are met. For Instacart to default to a 5% tip in the app and say that “tips are encouraged but not required” which is the reason they won’t raise the default is BS.
Raising the default to 10%—one of the demands—would not equate to requiring a tip. It’s all about a mindset thing. If people are given the option, they will most likely go with the default because it’s simply less work to do. You have to really want to tip more to raise it. But why not set the default a little higher? Give the workers a little more chance to earn a decent tip?
Will a boycott work? Sounds off in the comments!
Uber to roll out pension plans for UK drivers (Reuters)
Summary: Uber Technologies (UBER.N) said it would start rolling out its pension plan to all eligible drivers in the United Kingdom, months after the ride-hailing service granted workers’ rights to its drivers in the country.
In March, Uber had reclassified its more than 70,000 drivers in Britain as workers following a Supreme Court ruling. Uber had also said it would offer guaranteed entitlements, including holiday pay, a pension plan and limited minimum wage.
On Friday, the Silicon Valley company said it would contribute 3% of a driver’s earnings into a pension plan, while drivers can choose to contribute a minimum of 5% of their qualifying earnings.
Britain’s GMB union represents Uber’s drivers in the country, and has the right to negotiate on behalf of the workforce….
My Take: Is this what getting along looks like? It’s hard to tell because we don’t see cooperation like this in the U.S. We just see pushback and excuses.
Do you think we’ll ever get to the point in the U.S. where companies like Uber and Lyft will have pension plans for their drivers? And minimum wages? Holiday pay?
Uber CEO sees surge prices easing up by end of year (CNBC)
Summary: Uber has been struggling with high ride costs and long wait times throughout the pandemic. But that’s expected to change as the company enters the back half of its year, CEO Dara Khosrowshahi told CNBC on Tuesday.
The shift comes as more drivers return to its platform and supply-and-demand issues balance out, he said during a “Squawk Box” interview.
“What we did was, early on we identified our need to bring on more drivers onto the platform. So, in the second quarter, we really leaned into supply, especially in the United States, to reinvigorate our driver base and grow our driver base in the U.S.,” Khosrowshahi said. “We’re seeing that now, the benefits of that early investment, in Q3.”
“I do think what we’ll see is pricing is going to ease up as we go into the back half of the year and volume will especially accelerate,” he added.
Uber has spent hundreds of millions this past year in a bid to woo drivers to its platform to keep up with surging demand….
My Take: Surge prices may ease up, but I think the cost for passengers will remain high. I think Uber is realizing they can charge passengers more without giving more to the drivers, and that only works without surge pricing.
It’ll just be the new norm…passengers will pay more (maybe not as high as in recent months) and drivers will keep earning their base rate, miles and time at low rates compared to even just a few years ago.
Uber thinks it could actually turn a profit this quarter (The Verge)
Summary: Uber says it may be profitable this quarter for the first time in its history. The disclosure came in a new filing made with the US Securities and Exchange Commission. Whereas the company previously expected to make a net loss of under $100 million, it now believes it could make an adjusted profit of up to $25 million.
“We believe Uber is now tracking towards Adjusted EBITDA [earnings before interest, tax, depreciation and amortisation] breakeven in Q3, well ahead of our prior guidance,” said the company’s CFO, Nelson Chai, in the filing.
In a worst case scenario, the company cautions that it could still make a loss of $25 million.
However, criticism has been levelled at the way Uber calculated its adjusted profits. Gizmodo notes that the company’s definition of EBITDA includes an unusually large list of exclusions, and argues it’s not an accurate measure of the company’s overall profitability. Nevertheless, Uber shareholders were pleased, with the stock closing up 11 percent on the updated forecast….
My Take: In some ways, this can be considered extremely surprising since we’re just barely recovering from the pandemic closures across the U.S. In other ways, it’s not surprising in the least since Uber has been dumping its least profitable portions of the business and focusing on things that are going well for them (such as Uber Eats).
But again, like I said about the previous article, I think Uber is realizing that they can charge passengers more without giving more to the drivers. That’s kind of how profits work.
Are you surprised that Uber might turn a profit this quarter? What are your thoughts on surge pricing and how drivers are paid?
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-Paula @ RSG