Gig economy companies The flexibility and freedom they offer to workers is often touted, but for people who find work through companies like Instacart, Uber, DoorDash and Lyft, the economic and physical risks can outweigh the benefits.
Contractors who are at the forefront in the age of social distancing caused by the COVID-19 epidemic as providers of essential services to their wealthier customers are struggling with underperformance, lost tips and wages, and a lack of back-end support .
Dumpling, a food delivery startup, was born to question the status quo in the gig economy by giving more responsibility to the workers who run it. Dumplings connects customers with all the resources they need to migrate from the Instacart platform and start their own personal shopping business.
Dumpling is starting to focus on food delivery as the pandemic has made the perk an indispensable service for homebound citizens. So far, more than 2,000 buyers in all 50 states have become their personal instacarts .
Dumpling co-founder Joel Shapiro and Nate D’Anna met in college and were looking for a way to work together. Shapiro and D’Anna left their company jobs at National Instruments and Cisco to create dumpling.
"(We thought) what if we actually start a business to solve their problems, and not just the one percent hanging out on the coast?" Said D & # 39; Anna
Before we look at how Dumpling works, let's discuss the obvious: Not every gig worker wants to be a business owner, which is exactly the opposite of what the startup needs to be successful. Despite the spread of the gig economy in the past decade, only 3% of adults stated that gig work was their main source of income. According to the Federal Reserve, fewer than one in ten adults were full-time gig workers last report.
Instead, a bigger problem within the gig economy is the classification of workers, which leads to the rise of Unions and cooperatives for more customer support.
Dumplings are another example of what the future would look like.
Shapiro admits that not every gig worker will need dumpling. But instead of using dumpling solely as a place for gig workers to start their own business, he believes the startup can put more money in the hands of the workers.
"With several years of all these multi-demand apps, we know that employees will eventually be exploited and screwed up and their pay will be drastically reduced," he said. "We end up trying to give them control so that the carpet cannot be pulled out from under them."
How it works
To begin with, Dumpling helps users create their own LLCs. It also offers a range of different products, including a dumpling credit card that allows buyers to buy groceries before the customer pays, an app to centralize deliveries and customer communication, and a forum for mentoring and employee support.
According to Dumpling, customers mainly win customers through marketing and self-promotion when they place orders for other delivery apps. Some customers have recently started going straight to Dumpling to look for buyers to shop in the area.
Dumpling gives business owners 100% of the tips. Unlike Instacart, dumpling allows business owners to choose which tip options are displayed to their customers and set a personal default tip minimum. There is also room for customers to post reviews.
The company makes money in several ways. There is a one-time fee of $ 10 to set up, which includes a dumpling credit card, a listing on the website, and a search tool for buyers. The platform then charges customers either a monthly fee of $ 39 or a fee of $ 5 per transaction each time they book a job. On the other hand, customers pay 5% in addition to payment processing orders.
Dumpling claims it can help buyers make three times as much money as Instacart buyers. But let's do the math.
While the monthly fee or $ 5 per transaction fee could tip, Dumpling claims that users make an average profit of $ 33 per order, which is three times that of Instacart users. Instacart estimates that payment for full-service buyers is between $ 7 and $ 10 per order, according to a NerdWallet article.
Because buyers can set their own prices, customers can easily switch to the cheapest option of the day, promoting competition between buyers to keep prices low (and make less money).
There are a few reasons why Dumpling doesn't think it's going to be a race between buyers.
First, dumpling customers are mostly repeat customers who yearn for a personalized buyer to help them. This repeatability gives customers a degree of flexibility and stability in terms of income. Shoppers can set weekly grocery delivery times to manage orders instead of trying to drive an Uber and maximize their time on the road.
Second, Shapiro hopes pricing is not the only reason a customer goes to a buyer. He noted that reviews and ratings are big sellers as well as focus areas such as vegans, local farmers markets, dietary restrictions and special diets. Imagine you're new to Keto and can get a keto-savvy shopper to collect ingredients for you, in other words.
In the past three months, the platform has given tens of thousands of reviews to buyers. The average rating of a dumpling buyer is 4.9 to 5 stars.
It can't fix what's broken
Though Dumpling wants to take possession of the gig economy, he's experimenting with ways to support his growing network. One option would be to get volume discounts on health insurance and benefits. Dumpling will soon start providing fraud protection for every buyer on its platform.
While Dumpling can't fix the gig economy, it can dramatically change the way people work in it and have their careers. Especially the few who rely on the gig economy as their only job.
Matthew Telles, one of the first Instacart buyers in Chicago, fondly remembers the early days of the food delivery platform. He tipped an average of 20% on all orders, rarely drove more than five miles for a delivery, and was even invited to technical engineering calls to provide feedback on the platform.
Then Amazon bought Whole Foods, a store that Telles believes pressured Instacart to reach the largest market reach (including saving money) as soon as possible. He received orders from across the state. Instacart threatened to take a tip. The technical invitations to the call have been stopped.
Five years later, Telles stays in the app to help buyers. His efforts have contributed to millions of Instacart settlement payments. The company, which grew in importance during the pandemic, recently made its first profit. The buyers network continues to complain about the platform's lack of support and has organized several times to achieve better wages, change the minimum requirements for tips and personal protective equipment.
"Fighting Instacart is now my hobby," said Telles. "Dumpling is my career now."
Dumpling did not announce profitability, but the order volume increased 20-fold. The unprecedented growth has prompted Dumpling to announce recently that it has raised $ 6.5 million in Series A funds under the leadership of Forerunner Ventures. Participating investors include Floodgate and FUEL Capital. The company's total known funding to date is $ 10 million.
Telles loves the flexibility he can have to get a gratitude dinner for the most steadfast customers along with their groceries. He halved his hours and doubled his income by working full time in the app. And to his delight, he was invited to talk with Dumpling's co-founders himself, much like Instacart's early days.