Start-up delivery firms in the USA that threaten to disrupt the traditional parcel sector with low-cost ‘on-demand’ business models are starting to turn their ‘contractor’ couriers into part-time employees under legal pressure, driving up their costs but potentially improving their service quality.
The moves follow the widely-reported recent US court verdict that ordered controversial passenger transport company Uber to give employee status to one of its self-employed drivers. US media reported that the lawyer seeking to force Uber and rival Lyft to classify drivers as employees has also taken legal action against delivery start-ups Shyp, Instacart and Postmates.
Shyp, which offers deliveries in San Francisco, New York, Miami and Los Angeles, with Chicago to follow soon, this week announced that its couriers (‘Shyp Heroes’) would become part-time employees on so-called ‘W2’ contracts, joining warehouse staff and van drivers with this legal status, which includes social security, healthcare and other employee benefit payments. The company, which has raised $62 million in funding so far and currently has “hundreds” of workers, also pledged to give couriers better training.
CEO Kevin Gibbon said: “After careful consideration, we’ve decided to transition Shyp couriers, the individuals who complete pickups at our customers’ homes and offices, to W2 employees. This move is an investment in a longer-term relationship with our couriers, which we believe will ultimately create the best experience for our customers.
“This is an operational decision based on our interest in owning the entire, end-to-end Shyp experience; it is not in response to recent lawsuits against other technology companies. We’re doing this because we want to make the Shyp experience as good as it can be, for our customers and workforce alike. Our couriers interact directly with our customers more than anyone else. They pick up valuable items and make sure they get safely to our satellite drivers, who then get them to our warehouse.”
Gibbon added: “As a rapidly growing business, we want to ensure that each time a customer uses Shyp they have an incredible experience. For this reason, we want to provide our couriers with additional supervision, coaching, branded assets and training, which can only be done with employees, so a shift is needed. We want to continue developing relationships with our couriers, empowering them to take on increasing amounts of responsibilities in each market.”
Last month, Instacart, a same-day grocery delivery company now operating in 16 US cities, announced it would start to convert some of its 10,000 ‘personal shoppers’, who buy and deliver customer orders, into part-time employees. It claimed that this would result in better customer service with shoppers being trained to select the best products, despite the higher staff costs in future. The company uses crowdsourced contractors to buy customer orders at specific stores and deliver them in their own cars, often within an hour.
In contrast, a Uber-style business model is being maintained by Postmates, a San Francisco-based courier company that offers deliveries in some 28 US cities through a network of 13,000 registered bike couriers who buy customer orders from restaurants or city stores and then deliver them within an hour. The company, which has just raised a further $80 million for expansion, is keen to broaden its business beyond food deliveries and recently struck deals with Apple and convenience store chain 7-Eleven to deliver their products.
“Delivery of food is only the beginning of our journey, and our vision has always been to power on-demand deliveries for all retailers and merchants in a city. Food is for Postmates, what books were for Amazon,” declared co-founder and CEO Bastian Lehmann.
Similarly, California-based Deliv, which last month expanded by acquiring Chicago-based WeDeliver, also uses on-demand private drivers to deliver goods within eight major US cities.
