Harry here. I’m back from my vacation and ready to hit the ground running! I’ll be posting a review of my trip on Youtube and my personal blog, but in the mean time, this picture will have to suffice.
I’ve always been a fan of Sidecar’s technology but things have not gone well for them over the past year. Today, senior RSG contributor, Scott Van Maldegiam, takes a look at the latest happenings in the world of Sidecar. Many of you may know that they recently shifted to deliveries first but what does that mean for drivers, customers and the company itself?
If there were an annual Rideshare Awards celebration for 2015…
“In the category of ‘Most Changes in Direction’, the award goes to… SIDECAR!”
Yeah, they’d win it going away. Are these changes good? That is yet to be determined, but in my opinion, I don’t see how these changes can be viewed as positive. Over the past year, Sidecar has been relegated to a small player in a world where it is questionable if small players can survive.
Sidecar’s latest changes surround their direction as a Deliveries-First model. They aren’t getting out of the rideshare business, but all you have to do is look at their current website to see what is taking priority.
It has everything to do with deliveries and very little to do with rideshare. Let’s dive into the details of what Sidecar has done:
- Collision Insurance… GONE – Since Sidecar is now focusing on deliveries, they removed collision/comprehensive coverage. This leaves a huge gap in insurance and makes having a rideshare friendly policy more important than ever.
- Driver and Passenger Referrals… GONE – Since the middle of August, Sidecar stopped offering referrals with no notice to the community. Thanks for the heads up guys!
- Accepting New Drivers? – Sidecar is currently only accepting drivers in the San Francisco/South Bay, LA, Seattle, and Washington DC. There are other delivery markets but they are not accepting new drivers.
Deliveries Vs. Rideshare
Rideshare and deliveries are similar but different:
- One pickup, multiple drop-offs – Deliveries are much like a shared ride, but with a lot more passengers. Ideally, as more people use the service, the driver will become more profitable since they have a number of deliveries in a fewer number of miles.
- Deliver to the door – Delivery drivers have to find a place to park before getting out of their car and delivering the package to the person’s door. Depending on what is being delivered and where it is being delivered, the actual time outside the car making the delivery will vary.
- Different problem resolution needs – With rideshare, as long as the person is picked up and delivered with no injury, the resulting issues are easily resolved with no time crunch. With deliveries, the issues that come up are more time critical. Delivery companies need to be able to resolve order mistakes, incorrect deliveries and late deliveries. This requires a larger support staff as instant support is much more critical than with rideshare.
Challenges – Threats/Weaknesses
- Increased competition – Sidecar has changed its list of competitors from Lyft and Uber to DoorDash and Postmates. And while Sidecar had some unique features to its rideshare platform, these features do not translate to delivery services. There are also a number of competitors that you have never heard of that deliver for Google Express and Amazon Prime, to name a few. I hope to talk about those opportunities in a future article.
- Lack of marketing/sales – Other than Eat24, Sidecar has only signed up small local companies, and not very many of them. They need more contracts and more momentum ASAP.
- Small player and late to the game – While being third in to the game isn’t always a bad thing, it does mean you have to play catch up. I haven’t seen any urgency on the part of Sidecar to grow rapidly. The company seems much too conservative in its growth goals to succeed in this market.
- Ability to raise money – Sidecar has trailed Lyft and Uber in their ability to raise money.
- Service guarantee of 95% – This means they only guarantee 19 out 20 packages will be delivered as promised. I don’t know if other companies are offering higher guarantees, but 95% doesn’t seem like a high enough service guarantee to attract new customers.
What Sidecar Can Do – Strengths/Opportunities
- Technology – Sidecar is very good at creating technological solutions. While all of their unique rideshare features don’t translate very well to their new delivery model, they are developing solutions to the last yard, which is especially important in cities where parking is next to impossible to find for drivers. This was one of the unique challenges Harry pointed out in his experience delivering for Postmates.
- Service provider point of view – In my opinion, this is their biggest strength. Sidecar understands what drivers need and want. Drivers want the ability to set their own pricing. Drivers don’t want to worry about parking. Sidecar continues to find solutions to these and other issues that drivers run into.
- Engaging drivers – Sidecar created a driver community website for its drivers and this allowed drivers to feel more connected to the company and also provided a place to go to look for answers.
What Sidecar Should Do
Sidecar lacks the ability to raise money and sell. Right now, they badly need a few big customers in order to put them back on the map. Unless that happens, they are pigeonholed into being an also-ran. Without a big change, here are their options for exit strategies.
- Merge/Buy-out – This is the preferred result for both Sidecar and any company interested in Sidecar. They have great technology, but the people are the ones that came up with the ideas for that great technology and created those wonderful solutions. There are a lot of smart, creative and caring people at Sidecar. Negotiating a buy-out that motivates these people to stay is in everyone’s best interest.
- Sell their technology – I suspect a company, who thinks they already know everything (I won’t name names), has already made offers to Sidecar for some or all of their technology. Sidecar’s technology and patents have value, but this should be a last resort exit strategy.
I am rooting for Sidecar. They have been a driver friendly company in the past. Their problem has been generating enough demand and enough supply at the same time to gain traction. I am not encouraged with this new direction, but I hope they prove me wrong.
Drivers, what do you think about the current happenings with Sidecar and the direction they’re headed? Do you see them as a large player in the future or are they going to fall by the way side?
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-Scott @ RSG