What Uber should do now
Uber and other ride-hail companies should stop all but essential rides immediately, and focus on delivery. …
Uber is a logistics company. It’s best known for providing rides and delivering food, but the greater Uber ambition has always been to “get you anything in five minutes,” as co-founder and former CEO Travis Kalanick said in 2014.
In a pre-pandemic world, a service that delivered anyone anything in five minutes (or, more realistically, half an hour) was a luxury. Now, with an unprecedented share of the global population on lockdown, it’s suddenly become a necessity.
The billions of people confined to their homes still need food, medicines, and household supplies, at a minimum. But once-routine trips to the store have become risky, especially for the elderly and people with underlying health conditions at higher risk of falling seriously ill from Covid-19. So long as social distancing measures remain in place, fewer people going to stores is also better for everyone.
This is where Uber can help. Uber had nearly 1 million active drivers in the US and 5 million worldwide as of February. Yes, many of these drivers were part-time, but in raw numerical terms that’s more than five times the combined global staff of delivery giants Fedex and UPS.
Many of these drivers are rightfully wary of picking up passengers who may be infected with the coronavirus, putting themselves and their families at risk. This fear is particularly acute in the gig economy, where workers tend to lack benefits like healthcare and unemployment insurance that come with a traditional job. On March 24, a New York City Uber driver who ferried a sick passenger from the airport died of covid-19.
Fear and government-mandated quarantines have crushed the rides business. Uber suspended shared Pool rides across North America on March 17. Uber CEO Dara Khosrowshahi told investors in a business update two days later that bookings were down 60% to 70% compared to the previous year in hard-hit cities like Seattle, an impact that seems like to have intensified in the weeks since. Uber competitor Lyft has referred its drivers to warehouse and delivery jobs with Amazon, which is hiring 100,000 people.
The rides business seems unlikely to rebound until the pandemic is over, or at least contained, nor should Uber attempt to revive it prematurely. But Uber can still put its drivers to work, at greatly reduced risk, and provide an essential service to quarantined communities through its delivery operations. That’s why Uber and other ride-hail companies should stop all but essential rides immediately, and focus on delivery.
Picking it up
To understand Uber’s potential in the current crisis, it’s important to understand Uber’s model. Uber specializes in connecting a customer and a driver to get something—usually, a rider or a restaurant takeout order—quickly from point A (pickup) to point B (drop off). Uber started experimenting with moving things in addition to people in October 2015, when it launched its Uber Rush courier service in New York City, Chicago, and San Francisco. It later shut down Rush to focus exclusively on restaurant delivery with Uber Eats.
Uber is uniquely experienced at delivery among ride-hail companies. Its chief US competitor, Lyft, never developed a standalone delivery service, while others came to delivery much later in the game.
Uber isn’t designed for is the sort of batched, routed deliveries that companies like Fedex, UPS, or even regular mail services do. Uber’s millions of drivers use their own cars and motorbikes, not large company vans or the specialized refrigerated trucks employed by grocery delivery services like Ocado in the UK.
But you can still deliver a lot with the point-to-point model: a pre-packed grocery order, restaurant takeout, pet supplies, or some medications, for instance. You don’t need refrigerated vans if the food is only sitting in the car or motorbike carrier bag for 30 minutes or less, similar to the length of time many Americans would spend driving home from a supermarket.
To make this happen, Uber needs help from shops and businesses. Ideally, businesses would assemble and bag orders so that the Uber delivery person would only have to pick them up at the store and drop them off at the customer’s home. Uber right now should be contacting and signing up as many groceries, corner shops, pharmacies, pet stores, and other suppliers of essential goods as its network can handle.
The company has already started down that road. Uber Eats is accelerating its push into grocery delivery, the Financial Times reported last week, striking a deal with French supermarket Carrefour, among other retailers. In India, where 1.3 billion people are on lockdown, Uber in the past week partnered with e-commerce company Flipkart, online grocer BigBasket, and chain Spencer’s Retail to deliver essential goods in Bangalore, Delhi, and Mumbai. UK convenience store chain Costcutter struck a deal with Uber last fall to deliver staples like milk and bread.
“A lot of small stores, kind of these corner shops, have been integrating with Eats,” Khosrowshahi said on the March 19 investor call. “We want to be there to help them. There’s demand there. So we’re absolutely aggressively looking at alternative distribution, whether it’s grocery or food. And we definitely expect it to be a bigger part of our business.”
Uber’s existing Eats operation and experience with Rush give it a significant head start, but any ride-hail company could start working now on a pivot to delivery. Lyft, for example, announced a “driver task force” that lets drivers sign up for paid jobs that include providing rides to food bank volunteers and grocery staff.
In China, ride-hail leader Didi Chuxing launched a delivery service in 21 Chinese cities in mid-March after the coronavirus shattered demand for rides. Didi said customers would be able to buy groceries and coffee through the service.
DoorDash, a food delivery startup, recently added more than 1,800 US convenience stores to its platform. DoorDash’s competitor Postmates is delivering household goods and over-the-counter medications from more than 7,000 Walgreens in the US. London-based Deliveroo is testing delivery of basic groceries in several countries in Europe, Australia, and the United Arab Emirates.
Uber is also awaiting regulatory approval of its October 2019 acquisition of Cornershop, an online grocery startup based in Santiago, Chile, that delivers from supermarkets and big-box stores like Walmart and Petco in Chile, Colombia, Peru, Mexico, and Canada. Uber and Cornershop must operate separately until the deal is approved.
“By partnering with supermarkets, convenience stores and other retailers, we can help millions of people access the staple foods and supplies they need safely and reliably—and we’ll continue to work closely with public health authorities to provide additional support wherever we can,” an Uber spokesman told Quartz by email.
An economic lifeline
Whether Uber can deliver will matter not just to Uber’s customers, but also its workers. The US lost 701,000 jobs in March. Over the past four weeks, 10.4 million Americans filed for unemployment benefits. People are in dire need of work.
Here, again, Uber can help. Uber was born during the 2008 recession, when the ability to download an app and start earning money immediately was a lifeline for many Americans who had lost their jobs and savings. That scenario is likely to repeat itself at even greater scale in the coronavirus pandemic. If you can’t get a job stocking shelves at a grocery, signing up for Uber or another platform like it might be your best chance at earning an income.
No job that involves venturing out into the world will be zero risk, but by prioritizing delivery Uber can significantly reduce the risk to its drivers. Experts believe the risk of contracting Covid-19 from packages is generally low and manageable. Uber could build out its delivery capabilities to be contactless on both ends—drivers could pick up orders from a designated area of a store, away from other people, and drop them outside a customer’s home—such that they would rarely if ever need to venture within six feet of another person.
Uber has already taken steps to make it easier for drivers to start delivering. In cities where Uber Eats is available, Uber drivers who signed up to provide rides can activate delivery requests by toggling a setting in their driver app. Uber said yesterday that it would also connect out-of-work drivers to companies that are currently hiring, including Domino’s, Target-owned online grocer Shipt, and UK online grocer Ocado.
Even the nimblest of ride-hail companies won’t be able to make to the switch to delivery overnight, despite demand from global consumers. But companies like Uber that specialize in logistics and have experience adapting rapidly to changing demand—moving fast and breaking things, in Silicon Valley parlance—might have the best shot. For Uber to overhaul its operations to help keep the economy moving in our current crisis isn’t just the right thing to do; it may also be a win for workers and for Uber’s business.