I Don’t Want to Sit Next to a Tree on My Next Uber Ride
Uber’s recent offer of Christmas tree deliveries raises critical questions for the local delivery industry.
Is Uber expanding from the taxi sector into the local delivery industry? And if so, can Uber leverage its existing network of drivers and technology to perform deliveries?
The answer to both questions is no. Turns out, this was a simple publicity stunt for Uber, rather than a bold move into a new market or a test of its infrastructure to service local delivery. Instead of leveraging a network of independent drivers, the company is using Home Depot to deliver the trees!
For companies that are looking to venture into local delivery, this marketing ploy is a cautionary tale. Vehicle requirements, handling concerns, regulatory issues, and operational challenges may compel passenger delivery marketplaces (such as Uber, Lyft, and Flywheel) to recruit an entirely new group of drivers to provide professional yet cost-effective delivery services.
The clearest operational challenge is that packages do not commingle well with people. If you hired Uber to take you across town, would you be willing to wait in the car while the driver went into a building to pick up or deliver a package? Not only does the lack of commingling destroy delivery density, but it also drives up package delivery costs. The result is that Uber will require a new set of drivers and new routing technology for multiple pickups and dropoffs. And it’ll need to support a wide range of service levels, from same-day to scheduled.
Do these challenges prevent Uber from moving into delivery? Absolutely not. The on-demand ride service remains the odds-on favorite to disrupt the local delivery industry, given its technology expertise and the strength of its brand.
An easier route for Uber is to work with existing local carriers and their drivers, who work as independent contractors. By leveraging these folks’ operational expertise, it will be able to make deliveries cost effective right off the bat. And, unlike the tree delivery story, this is a business model that’s not just for Christmas.