Uber teases foodies with standalone UberEats app

Uber is testing a service that will allow Toronto residents to order food from their favorite restaurants through a standalone application called UberEats.
That name might seem familiar. That’s because Uber’s been testing the service, which was previously limited to a handful of meals, inside the main Uber app. Now it’s giving users in one city a chance to determine whether or not UberEats can stand without being propped up by the popularity of Uber’s core service.
Not that the two can really be separated: Food ordered through UberEats will be delivered by Uber drivers who might be ferrying passengers at the same time. Uber’s strength lies with that network of drivers (at least until self-driving cars take to the streets) and their willingness to drive around non-humanoid objects.
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UberEats is Uber’s first standalone app. Whenever the company experimented with other services in the past, whether it was delivering puppies or fiddling with a healthcare service, it did so as an addition to the Uber app people already use. Now, as the company told Wired, it wants to give UberEats room to breathe.
Toronto users can order food through UberEats between 10am and 10pm seven days a week. Right now the company is said to support the full menu of “over a hundred” restaurants in the city. The service’s Instant Delivery menu, which is available in the main Uber app, offers fewer options but much faster deliveries.
Deliveries from UberEats will be free until 2016. After that it’s not clear how much Uber intends to charge for the service, or whether it will be subject to the same “surge pricing” model that raises the cost of booking a ride with its main service when there’s inclement weather, high traffic, or, previously, emergencies.
UberEats is said to have taken three months to develop. So while the app seems like the realization of everyone’s belief that Uber will eventually move essentially anything, it’s hardly a bigger commitment than its other experiments. If you’ll pardon a food pun: Let’s not mistake an appetizer for the main course just yet.

Sidecar CEO: Why our new same-day deliveries can beat Uber’s

Launching a same-day urban delivery system isn’t quite as easy as pushing some code. Delivery people must be hired, routes planned, partnerships struck, parking sorted and pricing adjusted. Supply and demand must be balanced, and data analyzed to do so.

So when word broke Monday morning that Sidecar, the tiniest ride-hailing company with the smallest amount of funding, had launched an SF delivery service, I was surprised. This is an endeavor that Uber has been working toward, in theory, for more than a year. It has been practicing by delivering kittens and roses, and beta-testing pilots of UberFresh’s food delivery in LA and UberEssentials’ convenience store delivery in D.C. (the latter of which it gave up on recently).

And yet here comes Uber’s tiniest, least-threatening competitor, Sidecar, officially launching in San Francisco with a sizable partner in Eat24, and promising to roll delivery out to its eight total markets in the next few months.

Soon after this story published, news broke that Yelp acquired Eat24. A Sidecar spokesperson confirmed that this doesn’t effect its arrangement with Eat24, the partnership is still in place. In other words, Sidecar has teamed up with Yelp.

Was it just big talk about same day delivery or could Sidecar carry through? Do Uber, Postmates, and countless other delivery startups have any reason to be threatened? Is Sidecar delusional?

I hopped on the phone with Sidecar CEO Sunil Paul to ask. We talked about everything from why Sidecar is uniquely positioned to try this model, to whether this counts as a “pivot” for the company. The following has been edited for length and clarity.

How is this different from Uber’s experiments with delivery?

This is a genuine breakthrough. No one has ever done this before, being able to combine people and packages in the same trip and the same car. We’re able to do this because of some unique Sidecar ways of doing things. Namely, we ask for destinations and get destinations from every rider [when they first request a car].

Uber might not be combining people and packages, but it could do that very easily and undercut you.

We are taking a very different approach. We are providing infrastructure to commerce companies that want to enable same-day, on-demand service for their product … It’s not like Uber or Postmates, out to get their own set of delivery consumers. I think that’s important because when you are a commerce merchant, you don’t want to be in competition with a service provider.

What do you mean? Uber does work with service providers. It delivers meals from popular eateries in LA with UberFresh.
It’s closer to something like Munchery with partner restaurants. It’s a small, limited menu that you get to choose and it’s significantly branded “Uber.” A company that’s worth $40 billion and has multiple billions in capital, you have to go after big opportunities and generate the margin off them as much as you can. I think commerce merchants are smart enough to know they need the partners they can trust.

So Sidecar’s smaller size has hurt you in the past with growth, but here it actually helps you?

Exactly … in part because we’re smaller. But it’s also because we require destinations from riders. Having that destination up front is our advantage.

My editor hates this word, but is this a pivot? You said by the end of 2015 you expect half your business to be same-day deliveries. It sounds like your core product has changed dramatically.

As far as I’m concerned, companies large and small pivot all the time. I don’t have any problem calling it a pivot. But [this] has been part of the lore and inspiration for Sidecar from the very beginning. Back when we were first playing around with ideas, my co-founder Jahan couldn’t get a ride home on New Year’s Eve and he finally flagged down a pizza delivery guy and offered him $20 for a ride. His insight was that there are people out there who are willing to give rides. It is something that has been part of the DNA of the company from the founding.

How do you manage supply and demand for a company with as big a network of restaurants as Eat24? What if there aren’t drivers available to deliver food when customers order it?

We have a large network of drivers to start with. We have a large pool of resources. We are able to mix demand for rides with demand for packages or, in this case, hot food.

There are times when a driver might first give a ride to a rider and the next request might be a delivery and the next request might be for another delivery and that same trip combines with a rider. All three scenarios are possible; that’s how we’re able to get more capacity, magnify the efficiency of the network.

What about when things are really busy, like during rush hour? Who gets priority: Packages or people?

Riders don’t want to wait. When a rider is mixed with a package, the package gets picked up first, then the rider gets dropped off, then the package gets dropped off. The rider doesn’t ever know [they’re sharing the ride with a package]. We also have a waiting system … when people order delivery the see a higher than average wait time if a lot of drivers are busy.

Are you working with Instacart?

The partner we talked about is Eat24. We are working with large partners across categories, but we’re not disclosing specific names. The other categories are e-commerce flowers and groceries.

What does the delivery look like on the consumer end? Am I opening my Sidecar app if I order off Eat24?

It looks just like what they have already been experiencing … you’d see it through Eat24’s website or application. That’s what I mean when I say, “We’re an infrastructure provider for Eat24.”

How do Sidecar drivers, who are used to picking up passengers, pick up packages? Do they have to learn how to street park to go inside and get the packages?

It’s training. It’s not that hard, but it is a different behavior. Drivers that are doing pick-up and drop-off of packages go through training.

So not all your SF drivers are delivering packages yet?

Correct.

This seems like it could be really challenging to pull off. Can I spent an hour with a driver seeing it first hand?

Sure.

I’m sure you’ll be waiting on the edge of your seats for this next installment Gigaom readers. Until then…

On the way to $220M in funding, Instacart quietly changed its business model

In its early days, grocery store delivery startup Instacart made its money two ways: Through delivery fees and product markups. It charged customers more for individual groceries than their in-store price.

But in the last year, the company shifted its revenue strategy. It is allowing some grocery store partners to price their own goods on Instacart. In return, the grocers pay Instacart a fee to service their locations.  It explains why for some grocers the products cost the same on Instacart as they do in store, but for others the price is more (or, confusingly, less).

“We don’t want to be in the pricing game,” Instacart’s head of business Nilam Ganenthiran told me. “There’s exceptions, but that’s generally true. Retailers outsource their e-commerce to us for a fee.”

Although there’s variations in how each partnership is structured, Ganenthiran said the fee, charged to grocery store retailers, is now the company’s “primary model.”

Instacart never made any official announcements about its change in business strategy. I didn’t find out until questioning Ganenthiran about its profit margins. As a result, earlier this week when Instacart received its spate of news coverage over its $220 million funding and reported $2 billion valuation, some outlets misreported Instacart’s business model.

“There has been a perception of the markup model being our primary economic engine due to how we started 2.5 years ago,” Ganenthiran told me. “Our model actually has been evolving.”

Most publications didn’t realize that. The Wall Street Journal went so far as to write an additional story, separate from its funding brief, breaking down a potential Instacart profit on a typical grocery store transaction. The numbers didn’t look good, suggesting Instacart might make as low as $1.40 on an order of 15 basic items.

But since Instacart’s revenue isn’t primarily tied to product markups anymore, that may not be representative of its profit margins.

Instacart wouldn’t tell me whether its grocery store partner fee is calculated per item, per order, per customer, per month, or some other variant. It also wouldn’t disclose how much that fee is. Neither would Whole Foods when I reached out to them for comment, and Safeway didn’t respond. Without knowing what grocery stores are paying Instacart, it’s hard to deduce the company’s potential profit margins on each delivery. “There’s different strategies with different partners,” Ganenthiran explained.

In theory, it’s much smarter for Instacart to charge grocery stores a fee than for it to eke out profits on product markups. That kind of partnership makes grocery stores more amenable to improving Instacart’s efficiency (like offering the company its own personal checkout line). It also shields Instacart from the risk of variable food prices. Ganenthiran said, “Most grocers are past the tipping point where they understand consumers want this service.”

Uber’s latest experiment is an on-demand moving service

In the ongoing march to its outsized IPO, Uber is trying out yet another delivery product. But this time, instead of bringing you packages or food, the company wants to help you move.

UberCargo, which is being tested in Hong Kong right now, connects people with cargo vans that can help move bigger items, like mattresses and “large pets.” It can also be used like a taxi service for people traveling with big gear, such as surfers or bands. It’s not clear from Uber’s post why it picked Hong Kong as its testing ground, or when the option might roll out to other locations (I’ve reached out to the company for clarification and will update this when I hear back).

The fee will depend on both time and distance and loading time will be included. In Hong Kong, the base fare will be US$2.58 ($20 Hong Kong dollars), with additional per minute and per mile costs. Check out the breakdown here. You can ask the driver for help with that part, although their assistance doesn’t sound guaranteed from Uber’s blog post.

This isn’t the first of Uber’s delivery experiments. Part of the reason it has a $40 billion valuation is because it plans to transform urban logistics; it won’t be content with just changing the nature of the taxi industry. It’s testing couriers in New York City for letters and smaller packages, drivers in Los Angeles for food delivery, and corner store delivery in Washington D.C.

But Uber-for-moving may be the most helpful product yet. It opens up a ton of opportunities for the carless: Lugging stuff home from Ikea, purchasing items off Craigslist, traveling with hefty equipment. Farewell, expensive moving services and unwieldy U-hauls — you can stick with the family with far more stuff than the average single city-dweller. And good luck to the many on-demand moving apps that have formed in recent months. With Uber as a competitor, it will be a tough fight.

UberCargo could be the most useful thing for the carless urban dweller since … well … Uber itself.

Assuming its vans aren’t too creepy, of course. Twitter, for its part, has wasted no time in imagining the dystopian future of UberCargo:

Germany’s DHL delivers medicine by drone

The company has successfully completed a one-kilometer drone delivery of a packet of medicine from a Bonn pharmacy to its nearby headquarters. However, this was only a test, and DHL has no firm plans for commercial services as yet.

Amazon to begin Sunday deliveries with USPS, according to report

Sundays have been a relative wasteland for postal services since the free mail service was instituted in 1863. But according to the Wall Street Journal, Amazon (s amzn) has developed a partnership with USPS to furnish Sunday deliveries, beginning with New York and Los Angeles. Beginning November 17, Sunday deliveries will be eligible for any Amazon shipments and will soon expand to cities like Dallas, New Orleans, and Houston. London will also get Sunday delivery, albeit without USPS involvement.

Where’s that delivery guy? GrubHub intros meal tracking

GrubHub has souped up its mobile apps and web portal with new order tracking features, allowing its diners to track the status of their meals from the moment they leave the restaurant to the moment they arrive at the front door.

Steam and Valve Games Headed to the Mac

Us Mac gamers are a much abused, much maligned lot. We get titles late, and most never at all. By the time most titles do come to the Mac, we’ve probably already broken down and played them using Boot Camp or that gaming PC we hide in the closet that we bought specifically for the purpose. Today, things are looking up.

PC game maker and distributor Valve is dropping all kinds of hints, which are by no means ambiguous, that Steam and many of its titles are headed to the Mac sometime in the near future. MacRumors and various other Mac news sites received teaser images direct from Valve themselves, all of which point to that very same conclusion. Read More about Steam and Valve Games Headed to the Mac

Rogue Amoeba’s Live Disc

Rogue Amoeba – makers of some stellar audio software – are gearing up for another Macworld Expo in San Francisco, and have added a new twist to the goodies they’ll be offering. In years past they (like many attending developers) have handed out CDs loaded with their many ‘wares for Expo-goers to try out. The big problem has always been that by the time software is printed to disc and delivered to the Expo, it’s likely that updates have already been made to the software. It’s not the end of the world by any means, but presents a speed bump for those ready to try out the fun new applications.

Live Disc

Enter ‘Live Disc’, Rogue Amoeba’s cool new innovation that [sort of] eliminates the possibility of delivering discs with out-of-date code. They give you the full story on their blog, but here’s the gist of it:

Live Disc presents a window much like a customized Finder window, with application icons that you can drag for copying or double-click for launching. The magic is, if a newer copy exists on our web server, it will copy or launch that version instead, seamlessly.

This a very cool idea – one I’d love to hear your take on if you pick one up at The Big Show in a couple weeks. The really neat part is that this solution was one that was conceived just to show off their real products! It’s not far-fetched that they could package this into an application of it’s own, and all as a byproduct of their main focus. Great work guys! It’s stuff like this that makes me excited to play on a Mac everyday.