DoorDash is now offering fast grocery delivery in New York’s Chelsea neighborhood, but with fully planned couriers instead of its usual fleet of independent contractors, The Associated Press reported.
Online food ordering company DashCorps is creating a new company that will hire full- and part-time employees, with pay starting at $15 an hour and benefits available to qualified workers.
In using DoorDash’s new DashSmart warehouses, which are packed with grocery and other staples, customers will be able to have groceries delivered in 15 minutes or less.
“Achieving ultra-fast delivery times inherently requires more structure and organization to ensure that orders are fulfilled quickly and that merchant and customer expectations are met,” the company said in a blog post.
Unlike the gig work done by traditional DoorDash couriers, DashCorps workers will be able to set their own weekly hours, the AP reported. DashCorps employees will also have responsibilities beyond making deliveries that may include administrative tasks, stocking shelves, and providing customer support.
“The work involved with powering instant delivery from Dashmarts is fundamentally different from Dashing, and requires individuals looking for a different kind of work,” the post said.
Max Ratig, DoorDash’s vice president of public policy, said that each Dashmart will employ about 50 DashCorp employees. While the Chelsea neighborhood is currently the only area where the service is available, DoorDash said in a blog post that it plans to expand to New York and other cities in the coming months.
For more reporting from the Associated Press, see below.
The move is a big departure for DoorDash, which has long struggled to classify its gig workforce as employees because it would cost the company significantly. DoorDash backed Proposition 22, a ballot measure approved by California voters in 2020 that lets DoorDash, Uber and others treat their workers as independent contractors.
Daniel Morgan, a senior portfolio manager at Synovus Trust, said the new company could herald a shift toward full-time employment models for companies like DoorDash and Uber, which have faced continued challenges to their gig-based models. For example, a California judge ruled in August that Proposition 22 was unconstitutional.
“Will they all eventually move to the full-time employee model to derail increased state/federal regulation?” Morgan said.
But Ratig said DoorDash started DashCorps not to avoid employing DoorDash employees directly, but because it wanted to focus on building a new, standalone service that could eventually be sold in a variety of stores. Is. And because of the specific challenge of speed, the company must rely on the employee model so that employees are ready to respond to orders as they arrive.
Ratig said DoorDash is excited to offer a regular employment option for those who don’t want to do gig work.
“We want to meet people where they are,” he said. “We also believe that people should have more choices, not fewer.”
DoorDash employees will continue to operate in Dashmart warehouse and pack order.
DoorDash expects to expand 15-minute delivery to more neighborhoods in Manhattan and Brooklyn in the coming year.
Till now, the company was offering online grocery delivery in just 30 minutes from many of its Dashmart locations.
But the company is seeing that even faster delivery times improve customer satisfaction and order rates, said Fuad Hannon, DoorDash’s head of new verticals. He said customers were happy with 45-minute delivery times when the company launched in 2013, but they just won’t be.
“What we’ve seen since the early days of DoorDash is the desire for convenience only moves in one direction,” Hannon said.
DoorDash is also seeing pressure from competitors such as Joker, Fridge No More and Bike, which all promise 15-minute grocery delivery in New York, said Joe McCormack, a senior analyst at Third Bridge.
“Should consumer preference be driven primarily by what can get them groceries delivered faster, it is critical for DoorDash to remain competitive within the industry,” McCormack said.
Fast delivery has been a security issue in the past. Domino’s Pizza stopped promising 30-minute delivery in 1993 when it was sued by a St. Louis woman who was seriously injured after being hit by a speeding delivery driver.
Ratig said the couriers will have safety equipment that meets New York’s requirements and that the company will not make delivery promises it cannot keep. He said that fast deliveries would be done only in a tight circle.
Hannon said it would only take a few minutes to create an order within Dashmart, which would take couriers more than 10 minutes to reach their destination. But he added that the courier’s performance will not be based on the time of delivery.
“The focus will be on their safety and getting what customers want,” Hannon said.
For now, rapid delivery won’t cost more than regular delivery, Hannon said, but that may change in the future. Customers who are part of DoorDash’s DashPass program, which charges $9.99 per month, can get faster service without delivery fees.
Shares of DoorDash were up 2.7 percent to $162 per share in afternoon trading.