The rise (and impending fail?) of the on demand app industry

**03/02/2016 Edit/Addition**
I have a couple things I’d like to add to the article below. The on demand industry seems to be ever changing. Some companies get it right, while others simply dig deeper holes.

Last year, around Thanksgiving, Amazon began on-boarding (the industry term for hiring) their own drivers. The pay is very good. All of us flocked to it, and I think they on-boarded every single person that applied. It was (and is) very difficult to get any hours. Around New Years, they let go of their drivers that were contracted through various employment services. Those are the low paid, non tip receiving even though people gave them, drivers I mention later in the article. Amazon has plans, and I’m interested to see where they go.

Back to Instacart – my favorite on demand company to hate. They make it so easy, though. Today, I learned that in at least one city, they changed their pay structure again. The drivers that pick up and deliver your groceries (no shopping involved) not only receive all their tips, but now they get compensated a dollar! Yes, you read that right – $1.00. What this means is Instacart apparently believes that the customer should pay the salary of the worker, even though they are paying a premium for the service. And let’s face it – not everyone tips or tips properly. So that driver you decided to stiff? They just made a $1 for their time, the expense and use of their car, all so you didn’t have to get off the couch and pick up your own deliveries. Granted, you probably didn’t know this. It’s not like Instacart has every been forthcoming about where the money you pay them actually goes.

Bottom line: Any company that you give money to, you should know what they do with that money. And any person who allows a company to take advantage of them by working for such little return value? You should be ashamed as well. These companies will keep doing this as long as we let them. Stop letting them. Customers, stop giving these companies your hard earned money. Eventually, it trickles back, and one day it could be you getting paid pennies for your time as well.

Instacart’s response when queried:

They hid this from view on their page. It’s their page, so they are allowed. As we all know, that doesn’t mean it goes away. SHARE!!!!! 🙂

**End of Update**



This morning’s phone interview with an On Demand delivery company has been rescheduled. Two hours before my interview, I joined a Facebook page for other delivery drivers that worked for that company. The page is rampant with discussion of recent firings, as well as app issues.

While this company offers a “floor” (guaranteed dollar amount paid per hour) which varies in different cities, there are rules by which you receive this floor. One of these rules is that you cannot have a rejection rate above a certain percent. Should you reject too many orders sent to you, you don’t get paid the guarantee.

What if you sit there for hours, waiting on deliveries, but don’t receive any? There’s nothing to reject, so you should get paid the hourly minimum floor. What happens when the app goes haywire, and says it sent you deliveries, which you ignored, even though you never really received them? You get terminated, and they don’t pay you.

This just allegedly happened with a company called Grub Hub. Many industry related Facebook pages are rampant with rumblings of drivers not getting paid and being terminated, even though they waited, diligently watching their phones for a delivery, any delivery, yet none came. None were rejected. Instead, drivers were suspended and then let go for violating terms of contract. At the same time, these drivers received emails discussing the app issues Grub Hub was having, and that they were working on them.

Sadly, events such as these are becoming the norm in the on demand delivery industry. I previously wrote an article regarding Instacart, and their practices towards drivers. I’ve seen and heard Uber drivers complaining about the company taking too much of their money in “fees.” More and more, the workers are being paid less, yet the public is paying more for these services. Many are leaving the industry. This leaves the companies with sub standard workers (or too tired workers on our streets) because the have to spend more time working to make ends meet. Myself, rent is due in two days, and as of yet, I have no idea how I’m going to make it.

(Side note: I have applied and am waiting for something to come to fruition that will get me out of this industry, as well as going to school for my degree in Networking and Cybersecurity. It’s taking awhile, so if you are hiring at a decent living wage, by all means contact me! <g>)

I’ve been in the delivery industry for awhile. I was around when pizza delivery was all the rage. We made great money – minimum wage plus tips. It was the wild west for us drivers. Then more competition arrived on the seen. Over time, these companies started price wars with each other, lowering their price by ridiculous amounts to lure customers in hopes they’d stay for the long term. When they tried to put the prices back to normal, they found the majority of customers had no loyalty. They always went where the deal was. The economy was bad, and who could really blame them? Companies lost money, and had to figure out where to make it up. This ended with charging delivery fees, and moving drivers to a waitress type pay system (sub-minimum, many make $4/hour plus tips). Many customers still think delivery fees go to the driver as a tip. They don’t. It was a way for companies to charge more for their product without looking like they were raising their prices. The drivers suffered, and still suffer. Customers suffer with sub par product and service.

Following this, were the dot com and real estate bubbles. All pretty much the same activities as pizza delivery – over saturation, competition, companies needing to come up with cash, and the workers suffering for it until those who couldn’t survive went into the sunset. Granted there was a bit more to the real estate bubble, but really, if the rest wasn’t there, the illegal stuff wouldn’t have been necessary. Let’s face it, the things happening in the other industries may be legal, but ethics and morality flew out the window long ago.

What’s the difference with the on demand app industry? It’s happening faster – much faster. The fall of the other industries took several years, with the pizza industry taking the longest. In California, this industry has been around for 3 or 4 years at least, but over most of the country, we just started enjoying getting everything delivered to us over the last year. Some areas have never experienced it, and yet the downfall of the industry is already happening.

In Atlanta, we have Caviar, Postmates, Favor, Instacart, Shipt, GrubHub, Doordash, Amazon Prime Now, and probably a couple more I’ve forgotten. Amazon farms their deliveries out to courier companies. Those companies pay the driver a flat $9-10 per hour, and at least one driver told me he never receives the tips that are paid through the app. Wonder what happens to those? I (and at least one other friend) set up a phone interview with Caviar back in April when they came to town. No one called us at the appointed time, nor replied to our emails when we asked why. I worked with Favor a short time. When I asked if I could just pick up offered hours via people giving them up, I was told I could. However, instead they disabled me in their system. I didn’t bother emailing them. You can read about my experience with Instacart here. Shipt has been great. They are new and working out bugs, but they listen to us, making changes accordingly. I wish they were more busy, so I could work there exclusively. Postmates has been good. There are little issues, but no one is perfect. Their recent decision to do away with their customer service phone line for customers has me worried though. I can see quality customers going elsewhere, since they can’t contact anyone if there is an issue on their order. Doordash I have little experience with, as they just arrived in Atlanta, and I’ve only worked one 2.5 hour shift. GrubHub is the interview I rescheduled today, waiting to see what happens with their current issues.

The bottom line is that most of these companies aren’t going to last for the long term unless they restructure their models. You can’t have quality people without paying them, and you can’t pay them and stick around without charging the customers. It will be interesting to watch and see if they will be able to restructure their business models in a way that keeps the services available to the masses, become a kitsch high end service, or another one on every corner discount delivery like the pizza chains.


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