Delivery app DoorDash has broken its own gig worker model to hire couriers as employees for the first time, as part of a move to enter the crowded race for under 15-minute deliveries.
Sixty couriers working full-time for DoorDash’s pilot launch in New York will be hired with set pay and benefits, a departure from the existing gig worker model that the company has spent tens of millions of dollars to protect in the face of legislative pressure.
Employees will work for a newly created DoorDash subsidiary named DashCorps, and will rotate between biking orders to customers but also some “shelf-stocking, customer support and administrative work”.
They will be paid a starting rate of $15 per hour, plus customer tips, and will be banned from doing gig work for the company.
“It’s a different type of work than what an independent contractor Dasher does,” said Christopher Payne, DoorDash’s president. “We do know that there’s a subset of Dashers that want more of the certainty in the schedule of full-time employment, and so we’re offering this job to them. I think it will attract new people to DoorDash.”
DoorDash’s U-turn on its gig model was partly motivated by the need for delivery drivers to be available at the warehouse before an order is placed, to shave off crucial minutes of delivery time. The company said the structure was necessary due to outdated employment law.
Eventually, DashCorps employees and the facilities would be made available to third-party companies to offer their own white-label rapid delivery logistics, Payne said.
The move to open hyperlocal “dark” stores is an acknowledgment that the company’s strategy of having couriers travel to existing brick-and-mortar stores, such as 7-Eleven, was being outflanked. It has been unable to match the speed of the vertically integrated convenience deliveries offered by Gopuff and others.
It is also a concession that the gig worker model, which has been defended as the preferred status for people who want “flexible” work as independent contractors, has met its limit with the “instant needs” sector.
DoorDash is among the cluster of gig companies that have fought regulations across the US seeking to force employment rights for gig workers. In California, DoorDash spent more than $50m to back Proposition 22, a workaround that came into force this year.
The creation of DashCorps will be seized upon by campaigners who disputed claims by the gig giants over the feasibility of employment.
“It is a major crack in their argument that they can’t classify their workers as employees,” said Shannon Liss-Riordan, a leading employment rights attorney.
Since August 2020, DoorDash has operated a number of large out-of-town warehouses, known as DashMarts, that hold more than 3,500 products and deliver, via gig workers, in about 30 minutes. But in the face of growing competition from highly capitalised upstarts, the company has taken the decision to downsize and go more local. The newer format will be situated within communities and hold around 2,000 items.
Despite being an early player in restaurant delivery, DoorDash has been slower off the mark with rolling out rapid delivery. It means it will enter New York City against several nimble competitors, including JOKR — which announced a $260m funding round last week — and Buyk, which has 25 New York City locations, and is soon expanding to Chicago.
JOKR and Buyk also hire full-time employees in order to ensure deliveries leave immediately.
Rival delivery app Instacart is seeking to offer sub-15-minute delivery times, according to a “request for proposal” seen by the Financial Times, with the intent of piloting it in the first half of 2022.
