Fast grocery delivery has been on the rise lately, but one startup, called 1520, closed their doors this week after funding ran out. Also, in the rise of the gig economy, workers tend to prefer being independent contractors rather than employees—this is also making it harder to organize and make a meaningful impact when strikes occur. All this and more in this week’s roundup with senior RSG contributor Paula Gibbins.
Instant delivery startup 1520 reportedly closes its doors (Grocery Dive)
Summary: Like other companies hoping to find a path to success by stoking customer demand for groceries on the double, 1520 has sought to deliver on the proposition that racing products to people’s doors could lead to a payday for investors.
The question now is whether investors are beginning to lose their appetite for the hefty risks that come with putting capital into the fledgling instant delivery industry.
After getting off the ground with bootstrapping from its founders, 1520 brought in $7.8 million in seed capital in April and has expanded from a single dark store on Manhattan’s Upper East Side to other parts of the city. Convinced that its model was working, the company set up shop in Chicago in September.
Based in New York, 1520 has tried to stand out by executing what co-founder Maria Daniltceva described in an August interview with Grocery Dive as a “super-efficient” approach to procuring, storing and delivering groceries that benefited from the fact that the company had lower overhead costs than traditional grocery stores. The company assembled a team of bicycle couriers to transport orders to customers….
My Take: We’ve written pretty extensively about these fast delivery companies over the past several months. But will they work out? The model would need grocery stores or warehouses fairly close together in order to make the 10-20 minute promises succeed. Plus, they’d need gig workers (or, in the case of DashMart and JOKR, employees) willing to use a bike for all of their deliveries. Plus, they would need to make money doing it.
I think that last part is the key component. From the sounds of it, many of these fast delivery startups are waiving delivery fees or keeping them low to entice more customers. But many of them are also paying their workers an hourly wage.
The money to pay the workers has to come from somewhere. It also costs money to get customers in the first place. There is already a lot of competition; not just in the world of fast grocery delivery, but delivery in general. Everyone wants a slice of the pie.
Finally, some of the ones we’ve covered have been startups from Europe where the layout of their cities is much different, and oftentimes more bike-friendly. Not all major cities in the U.S. can boast the same.
It sounds like a cool concept, but I wouldn’t be surprised if only one or two of these startups survives, or if delivery platforms such as DoorDash will have better luck because they are already well established.
URB-E makes a splash in delivery market (URB-E)
My Take: OK, those trailers do look pretty cool. Plus to be able to complete deliveries without emissions is huge.
I’m assuming these deliveries are taking place fairly close to the warehouses, similar to the grocery delivery we spoke about earlier. But also, to be able to carry multiple deliveries at once, in such a confined space; it’s impressive to say the least.
Marc Lore’s Latest Startup Has 60 Chefs and Half a Billion Dollars (Bloomberg)
Summary: Since last year, several dozen purple-accented food trucks have been driving around suburban New Jersey, showing up at people’s houses to cook them food at their curb when beckoned through a smartphone application. The business that owns these trucks is a startup called Wonder, and it has used Westfield, an affluent town about 20 miles from Manhattan, as a testing ground for its brand of food delivery, recently spreading to a handful of neighboring communities.
Now, it’s planning a massive expansion, with hundreds of millions of dollars from investors, to go from 60 trucks today to more than 1,000 by the end of 2022….
My Take: This is higher brow than anything I would ever have come up with. To have a food truck that’s also a food delivery model. It boggles the mind a bit.
Have you had any experience with Wonder or any cloud kitchens? Does it work?
Why the resurgence of organized labor hasn’t helped gig workers (Fast Company)
Summary: On October 16, an unknown number of drivers for grocery-delivery service Instacart went on strike. These shoppers, as Instacart calls its independent contractors, vowed to forgo logging on to the app that provides their dispatches. Other drivers who couldn’t afford to go without work still promised to reject the lowest-paying grocery orders, which pay $7 to the driver. The protestors demanded that Instacart meet a number of demands around higher fees, commissions, and tips, plus a reformed rating system.
You might have known about the strike if you read the technology business press or followed it on Twitter. But if you are an Instacart customer, you probably didn’t notice it. Organizers couldn’t provide a figure of how many people took part, but they concede it’s a small number compared to Instacart’s more than half a million shoppers.
The striking Instacart drivers aren’t the only gig workers who have found it difficult to improve their working conditions by banding together. Many sectors of the service economy are facing dire labor shortages, as part of the “Great Resignation.” In theory, that should give the remaining workers plenty of leverage to demand better pay. But many gig-economy companies, especially delivery services, have an overabundance of workers with little or no power to negotiate….
My Take: We hear about strikes fairly often among gig workers. On Reddit there’s a call for a strike of some kind almost every day. But do they make an impact? It hasn’t really seemed like it.
There are two camps: people who want change and people who are just doing what they can to earn their wages. When the people who want change call for a strike, that just increases the possible earnings of the people who just want to earn their wages.
It’s hard to organize since everyone is considered an independent contractor. Plus, there’s no way to communicate with literally everyone doing the gig. We’ve written about how hard it is to organize a group of Uber drivers – it’s tough!
Finally, there’s always someone willing to do the work (or cross the strike line, if you will).
Another factor could be that no one can agree on what they want. Sure, everyone wants better wages, but at what cost? Some drivers want to become employees and have benefits, while the majority of others want to have guaranteed flexibility and the freedom of not having a boss to answer to.
Is there a meeting ground somewhere in the middle? What could that look like? How do we get there?
Uber, Deliveroo and other gig economy firms face strict new rules in Europe (CNBC)
Summary: Legislators in Europe have proposed tough new rules for gig economy companies such as Uber and Amazon-backed Deliveroo.
The proposals — published Thursday by the European Commission, the executive arm of the EU — are a major step toward requiring gig economy companies to classify drivers, couriers, cleaners, fitness coaches, masseuses and other workers who use apps and online platforms to find work as employees.
Employee status entitles workers to a minimum wage, holiday pay, unemployment and health benefits, and other legal protections depending on the country where they worked.
The proposals, which have been welcomed by labor unions, could affect an estimated 4.1 million gig economy workers across Europe. They have to go through several legislative steps before they become law….
My Take: I don’t really have anything to say about this…yet. Let’s just see how this all plays out, shall we?
The State of Gig Work in 2021 (Pew Research)
Summary: 16% of Americans have ever earned money from an online gig platform. While most gig platform workers say they have had a positive experience with these jobs, some report facing on-the-job troubles like being treated rudely or sexually harassed.
Nontraditional, short-term and contract work existed prior to the internet and smartphones, but the gig economy has ushered in a new way of connecting people with consumers and those who want to hire them. Indeed, the emergence of companies like Uber, TaskRabbit or DoorDash has expanded the way people earn money and added another dimension to the labor force.
To better understand the experiences of people who take on work through online gig platforms, Pew Research Center surveyed U.S. adults in August 2021 and found that 16% of Americans have ever earned money through an online gig platform in at least one of the following ways: driving for a ride-hailing app; shopping for or delivering groceries or household items; performing household tasks like cleaning someone’s home or assembling furniture, or running errands like picking up dry cleaning; making deliveries from a restaurant or store for a delivery app; using a personal vehicle to deliver packages to others via a mobile app or website such as Amazon Flex; or doing something else along these lines….
My Take: I’m trying to decide if 16% is a higher or lower number than I expected. If I were a teenager looking for a job, I think I’d rather try out gig work than to head to McDonald’s (or KFC, like I actually did as a teen). It would be easy work where I wouldn’t have to be on my feet all day. And we won’t get into the whole part where I rarely ever got a break.
So, it’s no real surprise to me that people ages 18-29 tend to dominate in the gig work world. And, as for the top reasons, none of them surprise me either.
I’ve been in those shoes. I have done gig work in order to save up extra money, to cover a change in income, to control my own schedule, and just to do something different.
What are your reasons for trying out gig work? What should gig work look like?
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-Paula @ RSG