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These Startups Deliver Groceries Fast—Without Gig Workers

The gig economy is one of Silicon Valley’s greatest tricks of the last decade. Armed with a smartphone, a car, a bag, a bike, workers can sign up and sign on—to ferry passengers, to perform household chores, to pet sit, to deliver groceries. Companies, including Uber, Lyft, and DoorDash, praise the model’s flexibility for workers sick of shifts. It also allows the companies to neatly sidestep paying for the benefits that traditionally come with employment in the US: health care, paid time off, and workers’ compensation. Last year, the companies funded a successful California ballot initiative that enshrined the gig economy principles into law. Similar efforts are underway in Massachusetts, Illinois, and New York.

But a new kind of business, which has alighted with a capitalist fury on US cities including New York and Chicago this fall, has scrapped this playbook. A host of “instant delivery” startups—Jokr, Buyk, 1520, Fridge No More, Gorillas, Getir—promise extra-fast, convenience-store-style products direct to city dwellers’ doors. The companies say orders will arrive 30, 20, 15, or even 10 minutes after customers hit the Buy button on their apps. And the couriers making the deliveries, mostly on electric bicycles, aren’t gig workers or contractors—they’re employees.

“It'd be very difficult for us to guarantee 10-minute grocery delivery if we didn't have people on staff,” says Adam Wacenske, the head of US operations at Gorillas. At 18 months old, and armed with more than $1 billion in funding, the German startup is a formidable veteran in the instant delivery space. Gorillas employees receive health care benefits and paid time off, and most are full-time, he says. The company says couriers get the equipment they need — including ebikes, reflective vests, and rain gear — for free.

These startups generally rent small storefronts in dense, urban areas and stock each mini-warehouse with between 1,000 and 2,500 products—another departure from companies such as DoorDash, UberEats, Instacart, and Shipt, which tend to operate virtually. Inside the storefronts, workers, also employees, stock, pick, and bag items to fulfill orders, which tend to be smaller than a typical weekly or biweekly grocery haul. Couriers stand by to ferry them to their destination. Both DoorDash and GoPuff, another delivery company, run similar warehouses for convenience items, but they only employ warehouse workers, with delivery people still working as independent contractors.

The companies have benefited from a surge in funding for food and beverage delivery businesses, which have pulled in $16 billion in 2021 so far, according to CB Insights. The cash allows some companies to subsidize delivered groceries, so that they’re cheaper than what a customer might pay at a store, says Jackie Tubbs, an analyst with CB Insights who studies the industry.

Jordan Berke, the founder of Tomorrow Retail Consulting who previously ran ecommerce operations in China for Walmart, says the companies are displacing trips to convenience stores, gas stations, and small supermarkets. They’re built on the theory that, when it comes to delivery, there is no such thing as too fast. They’ve grown quickly during the pandemic, when some people tried to avoid leaving their homes. Berke expects many of those customers to stick. “What we’re seeing is that instant access to things we need is a never-go-back experience,” he says.

Not all the employees are happy. In Berlin, Gorillas workers have complained about missing pay and alleged that the company’s jackets and rain gear don’t sufficiently protect them against the weather. Some German Gorillas workers who participated in “wildcat” strikes—unsanctioned by trade unions and not protected by law—were reportedly fired after bringing several warehouses to a standstill. The standoff has led workers and labor experts to question whether the new model is simply gig work dressed in new clothing. “We take a lot of pride in making sure our employees’ experiences in the warehouse, in our corporate headquarters, and for our riders is top notch,” says Wacenske.

In the US, workers for New York-based Buyk have complained in online forums about late paychecks, with some saying they quit as a result. “The vast majority of issues around payroll have been resolved,” says CEO James Walker. “I can’t say as a startup company, and one that’s growing really quickly, that we don't have those growing pains.”

But in an era where companies such as Uber, Lyft, and DoorDash offer primarily low-wage independent contractor work, labor experts say the arrangement is an unexpected reflection of the current labor market. “It’s a sad commentary that we’re surprised by this, because all of these workers, under law, should be classified as employees,” says Erin Hatton, a sociologist who studies labor and inequality at the University of Buffalo.

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She says the startups appear to see delivering groceries quickly as a specialized skill. Couriers are “navigating heavy traffic in urban spaces, and to do so quickly is difficult and can be dangerous,” Hatton says. “I hope that there is a new recognition that we need to treat workers well, especially when we expect them to perform at high levels.”

Anthony Hom has delivered meals for UberEats in Manhattan for years, but when the Chicago-based startup 1520 began operating in the city, he joined as a full-time employee, delivering groceries on a company ebike. He says he appreciates the job’s workers’ compensation, along with the $18 hourly wage, plus tips. When it comes to bicycle accidents, “it’s not a matter of if, it’s a matter of when. You’ve got to respect the danger,” he says. At least 10 delivery cyclists have been killed on the job in New York this year. Twenty-four cyclists died in the city in 2020, and 5,175 were injured. Hom runs a YouTube channel that gives newbie cyclists and scooter-owners tips on how to stay safe while delivering.

Still, Hom says there are downsides to being an employee. He still delivers for Uber at times, but he can stop working when he likes. “If it’s raining, you really don’t want to be there outside in the concrete jungle,” he says.

Beyond the need to ensure quick deliveries, the companies also may be reacting to pandemic-induced changes in the labor market. “The unskilled labor market is very, very hot right now, with hourly pay rates in cities well over $15, often at $18,” says Michael Reich, an economist and co-chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment at UC Berkeley. “Gig economy” companies like Uber and Lyft are finding it harder to recruit workers. “In this environment, being paid as an independent contractor without any pay for waiting time is not competitive to being hired as an employee and being paid for all your working hours,” says Reich.

Buyk, a US version of the Russian company Samokat, began operating in New York City in September. Bike couriers earn a $17 minimum hourly wage, says Walker, the CEO, and each is provided with a pedal-assist bicycle and jackets. Full-time workers receive time off, medical, dental, and vision insurance, and commuter benefits, Walker says. “Our goal is to have as many full-time workers as possible,” he adds. The startup says that customer tips all go to the couriers. “I don’t think that dedicated, passionate employees are necessary to be in the ultrafast grocery business, but I think they’re necessary if you want to win, and we’re very committed to winning,” says Walker. He says Buyk now has more than 20 warehouses across all five boroughs, which are collectively completing 1,400 orders a day.

It may be too early to tell whether hiring workers as employees rather than contractors will help any of these startups survive. Do people buying groceries care about the working conditions of the people delivering their stuff? Berke, the consultant, is skeptical. It’s more expensive for the companies to deliver groceries with employees instead of gig workers, he says. “I don’t see where they’re driving greater loyalty among consumers.”

Updated, 12-2-21, 11:40am ET: An earlier version of this article incorrectly said each of Buyk's 20 New York warehouses were completing 1,400 orders a day. 

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