freelance economy It is one of the greatest Silicon Valley scams of the last decade. Armed with a smartphone, a car, a suitcase, and a bike, workers can sign up and sign up — to pick up passengers, perform housework, sit pets, and deliver groceries. Companies including Uber, Lyft and DoorDash are praising the model’s flexibility for workers weary of shift work. It also allows companies to neatly avoid paying for the benefits that traditionally come with employment in the United States: health care, paid time off, and workers’ compensation. Last year, the two companies funded a successful California ballot initiative that enshrined the principles of the temporary jobs economy in law. Similar efforts are underway in Massachusetts, Illinois and New York.
But a new kind of business, which erupted with capitalist fury on American cities including New York and Chicago this fall, has scrapped that evidence. A host of “instant delivery” start-ups – Jokr, Buyk, 1520, Fridge No More, Gorillas, Getir – promise ultra-fast convenience store-style products straight to the doors of city dwellers. Companies say orders will arrive 30, 20, 15 or even 10 minutes after customers hit the buy button on their apps. And the couriers who do deliveries, mostly on electric bikes, aren’t temporary workers or contractors – they’re employees.
“It would be very difficult for us to ensure 10 minute grocery deliveries if we did not have staff,” says Adam Wacenske, Gorillas’ head of US operations. At 18 months old, and armed with over $1 billion in funding, the German startup is a formidable veteran of instant delivery. Gorillas employees receive health care benefits and paid vacation, and most work full time, he says. The company says the couriers get the gear they need — including ebikes, reflective jackets and rain gear — for free.
These start-ups generally rent small storefronts in dense urban areas and stock each small warehouse with 1,000-2,500 products — another departure from companies like DoorDash, UberEats, Instacart and Shipt, which tend to run roughly the same. Inside the storefronts, workers and staff also stock, pick and bag items to fulfill orders, which tend to be smaller than the usual weekly or bi-monthly grocery packages. The couriers stand ready to take them to their destination. DoorDash and GoPuff, another delivery company, operate similar warehouses for convenience goods, but they only employ warehouse workers, while delivery people still operate as independent contractors.
The companies have benefited from increased funding for food and beverage delivery companies, which have raised $16 billion in 2021 so far, according to CB Insights. The cash allows some companies to subsidize the groceries that are being delivered, so they are cheaper than what a customer might pay in store, says Jackie Tubbs, an analyst at CB Insights who studies the industry.
Jordan Burke, founder of Tomorrow Retail Consulting who previously ran Walmart’s China e-commerce operations, says companies are shifting trips to convenience stores, gas stations and small supermarkets. It is based on the theory that when it comes to delivery, there is no such thing as speed. It has grown rapidly during the pandemic, when some people have tried to avoid leaving their homes. Berke expects many of these customers to continue. “What we see is that immediate access to the things we need is an irreversible experience,” he says.
Not all employees are happy. In Berlin, Gorillas workers complained about losing their salaries and claimed that company jackets and rain gear did not adequately protect them from the weather. Some German gorilla workers who took part in “wild” strikes – unauthorized by trade unions and not protected by law – were reportedly fired after a number of warehouses shut down. The confrontation prompted workers and labor experts to question whether the new model was just a new-look gig business. “We take great pride in making sure our employees’ experiences in warehouses, on corporate headquarters, and our passengers are first class,” says Wacenske.
In the US, New York-based Buyk workers have complained on online forums about delayed salaries, with some saying they quit as a result. “The vast majority of issues with salaries have been resolved,” says CEO James Walker. “I wouldn’t say as a startup, a company that’s growing so fast, that we don’t have these growing pains.”