Tipping in the US is a critical part of how the wheels turn in the service economy. One area of service that has been largely overlooked, however, is the world of last-mile delivery: a service job that gets forgotten when it comes to tipping because those who deliver the goods usually don’t work for the company. company that sells them. product, leaving the responsibility and the incentive to dump it up in the air.
Now a new startup called Drivr is launching to try to bridge that gap.
Drivr is a crowdsourced tipping platform that uses data science to assign drivers to neighborhoods and then creates tip pools to collect monthly contributions from residents in those neighborhoods, with the sum then divided among the drivers. that serve those areas proportionally based on the number of deliveries they make. I have done there. Drivr has built apps for both sides of its market: residents to tip and drivers to sign up and collect those tips, and will launch first in the city of Santa Cruz, California, before expanding to other parts of the US. USA
The arrival of Drivr (ho ho) comes as several other startups are also thinking about tipping and how to build a business from it. They include Seattle’s Tiphaus; Tipjar in the UK (which has raised around $4 million from angels and crowdfunding); 7shifts (which covers a broader range of services and has raised more than $130 million); Easy tip; and TipPot. Patreon, now valued at more than $4 billion, is also zeroing in on the idea of customers voluntarily paying producers as part of the compensation equation. Patreon’s focus is on creative, but coincidentally it also has a similar membership concept to Drivr with its monthly contribution element.
Building a platform for collecting and distributing tips to last-mile drivers is yet to come, given that tips have already become so commonplace in other service areas, including the tech economy.
In the world of on-demand mobility services dominated by Uber and Lyft, tipping has already come and gone like a thorny issue.
Industry leader Uber was initially reluctant to create a space for tipping, arguing that the price they charged and payments to drivers already took tips into account (it also conveniently helped reduce the friction of paying a service). that was already potentially dancing on the brink of reasonableness and affordability for most consumers). Drivers and customers took issue with that, as the lack of transparency felt a bit exploitative rather than fair. Finally, in 2017, Uber relented and created an option to receive tips. But that was not without its problems: user behavior initially seemed inclined to brush aside advice.
The challenges are even greater for last-mile drivers, who are under a lot of pressure to deliver, so to speak.
A daily route will often include between 250 and 300 packages with pay ranging from $16 to $22 per hour of work. The number of packs per day, but not the payout rate, increases up to 400 during holiday sales and made-up sales holidays like Prime Day. Adding to the complexities of Amazon managing tips for drivers you don’t employ, there’s another disincentive: Membership services like Prime have intentionally lowered the barrier to purchase by including shipping costs, meaning that they somehow build a Tipping option would defeat the point of that. as far as Amazon is concerned.
The Drivr concept is still in its early stages, as is the startup, which is largely self-funded to begin with with $1 million from co-founders Sol Lipman and Jacob Knobel themselves.
The two have worked together for years, building a number of startups together, some of which were acquired by Aol and Yahoo, which are now the same company. (Yahoo also owns TechCrunch, and to be clear, that’s not how I came into contact with the startup.) Most recently, the two worked together on Amazon on Ring, among other things after Amazon acquired a startup called Owlcam, where they both held senior positions.
It was at Amazon, Lipman told me, that he began to think about the role last-mile delivery guys play in the e-commerce ecosystem. In short, drivers have it bad. On the one hand, they are essential both for the customer experience and, more practically, for the completion of each transaction by delivering the product to the buyer. But on the other hand, drivers are also working remotely from the companies themselves, as both Amazon and major delivery partners like FedEx generally don’t directly employ all of their last-mile carriers. (Flex and Whole Foods are examples of exceptions where Amazon does and, in particular, may tip drivers for these services.)
One of the consequences is that drivers usually do not have the possibility to receive tips.
This is where Drivr comes into play. Lipman’s theory is that because tipping has become a central part of how people in delivery roles are paid, when it’s not possible to do so, it impacts not only drivers’ take-home pay, but also their loyalty. to stay at work. As a result, dropout rates are dire for delivery drivers. Estimates vary, but one report estimated that 15.8% of drivers operating the dispatch model typically leave their jobs within 30 days, and 35.4% do so within 90 days. Drivr cites research stating that only 10% stay for a year. Simply put, the pay for many of them is not worth the effort involved.
Initially, Drivr will operate its tips service through a pooled model: it uses algorithms and census data to determine “neighborhoods” around which it organizes both residents and drivers who work in that area, and will include data in them. about where and how much controllers work.
“We track their location and the time they spend in any given neighborhood. We take that data and dole out tips fairly based on that,” Lipman said.
Residents use an app to put money into a payout jar, which is split and distributed among drivers in the area served. Drivers are paid twice a month from the pot, and Drivr charges a 6% transaction fee as part of their cutoff.
There are some aspects of the model that can only work well if Drivr scales. If a neighborhood only has the acceptance of one or two residents who put in $10 a month, that makes it a very insignificant pot to share between substantially more than one or two drivers. Like many other collaborative efforts, there is a leap of faith and belief in the larger goal.
“Like NextDoor, our strategy is to start hyperlocal and expand regionally. We developed the neighborhood before we released it to Drivers to avoid empty neighborhoods,” Lipman said. “But for drivers, even a modest tip pot to start with has value. Again, if 10% of customers tip $10 per month, the driver’s salary will increase by 20%. This has a significant impact on the income of the driver. The alternative is to continue doing nothing to show your support for the drivers.”
There is also the fact that not all drivers are good. Lipman said that in the future, the plan will be to allow customers to also use the app to tip specific drivers in addition to tipping in the virtual tip jar.
There may also be some confusion once you start layering another service delivery layer on top of the existing delivery model. People who do have problems with their deliveries may be inclined to think that Drivr acts as a middleman for that too, just like they are for tips. Lipman notes that those with issues should still contact Amazon (or another relevant retailer) directly.
That raises another question, which is whether Amazon or others will try to shut down Drivr for inserting themselves into the process.
Lipman’s response: Amazon and FedEx drivers don’t work for Amazon, they work for the third-party companies that deliver for them. Meaning: Amazon technically has nothing to say.
“If there is a legitimate reason for a [service provider] do not want our platform in service, we are open to comments. However, we believe the opposite to be true,” Lipman said. “Retailers like Amazon and delivery service providers are going to love what we’re doing. We’re helping drivers get paid more, which is the best way to address turnover among last-mile drivers, and it’s their biggest problem and cost center.” Doing some pre-launch homework, Lipman said conversations with the service providers themselves found “100% of them support the product and encourage their drivers to sign up.”
Source: news.google.com