Is Uber Delivery Coming?
Uber is doing an amazing job at disrupting the local delivery industry — at least the local delivery of people. But while it’s been applauded for opening up users’ access to taxis, what many analysts have ignored is its significant effect on drivers. Not only has Uber enabled drivers to escape from working for a taxi or black car company, but it has also empowered them to truly strike out on their own and be successful.
It’s inevitable that the local delivery industry also will soon be “Uberized.” Today, although local delivery drivers operate as independent contractors, they are dependent on delivery companies who drum up business using modest sales organizations and local brands. If local drivers had direct access to this pipeline, they would jump at the chance to control their situation more tightly and would probably benefit economically, since local delivery companies retain 30-40% of revenue.
The rise in driver independence is propelled by three changes. First, low internet and mobile technology costs now enable every driver to receive orders electronically. In the old days, delivery firms needed to provide Nextel phones or two-way radios. Secondly, local delivery companies have pushed more and more costs onto local drivers. By forcing them to work as independent contractors, delivery companies have freed them up to provide delivery services to anyone. And the last change? Powerful brands that aggregate the delivery orders and tender them directly to local drivers. That is where Uber, or another strong brand, will step in.
There are segments of the local delivery industry that are protected (for example, sorting for routes and store replenishment programs need cross-docks). But when it comes to on-demand delivery, local carriers are at high risk of being dis-intermediated.