Cheers - DoorDash Doubles Down on Drinks
AB5 ruled legal, Cruise to Houston, eGrocery sales down
We’ve got a juicy cocktail of stories today, including a number of developments at DoorDash, a big legal hangover, AVs back in action and slumping grocery sales. Let’s get to it!
Today:
DoorDash Boasts New Booze + Community Options
3PDs, TNCs On the Hook After AB5 Ruling
Chart Time | eGrocery Sales Slip
Cruise Heads to Houston with New Money
3PD | DoorDash Expands Alcohol Partnerships, Boosts Community
Cheers! DoorDash is doubling down on liquor delivery, as it adds new booze-boasting storefronts from partners like Food Lion, Hannaford, Giant Food, MARTIN'S, Stop & Shop, Buy Rite Liquors, Big Red Liquors, Spirits Unlimited and Stew Leonard’s Wines and Spirits. First launched in 2021, DD is now the category share leader for third-party liquor delivery, with merchant count up 60% YoY in 2023. To keep those sales booming, DoorDash has also unveiled some new ad products for the category: sponsored products for alcohol, occasion branded campaigns (think Cinco de Mayo,) sponsored brands for alcohol, plus partnerships with MikMak and Symbiosys.AI. “Outside of purchasing alcohol at restaurants or bars, the #1 preferred method of buying alcohol is using an app to order for same-day delivery,” noted Toby Espinosa, VP of Ads.
The Big Picture: DoorDash has more on its mind than just spirits this week; the company is also celebrating 100 million meals delivered through Project DASH. Since 2018, the initiative has worked with the likes of Meals on Wheels, United Way and Feeding America to get free meals to people experiencing food insecurity. On the worker front, DD is also highlighting recent changes to its app, brought about by recommendations from its Dasher Community Council. Those include post-checkout tipping, increased flexibility and choice in what sort of deliveries a worker will and won’t do (including alcohol delivery,) new safety features, additional Dasher-exclusive perks and a soon-to-be-announced improved deactivation process.
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POLICY | AB5 Found Legal, Will Platforms Face Claims?
AB5, California’s independent contractor compensation law, has been upheld by the 9th U.S. Circuit Court of Appeals. Known as the Olsen case, the suit contended that Uber and Postmates (now owned by Uber) had been unfairly singled out by the law, which codified the ABC test for worker benefits, but holds gig platforms (and trucking cos) to a higher standard. While an earlier, three-judge panel had ruled in Uber’s favor, the full 11-judge appeals court thinks otherwise. Judge Jacqueline Nguyen ruled there are “plausible reasons” for treating Uber differently from other types of cos that hire gig workers, because the state “perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address — worker misclassification.”
The Big Picture: This is a consequential development, but just how consequential remains to be seen. After AB5’s passage, the gig platforms rallied together to pass Prop 22, which gave them an exemption from the new law, and ensured drivers and couriers would be classified as independent contractors. However, there are ongoing state enforcement actions, regarding worker misclassification and wages, coinciding with the period after AB5, but before Prop 22; with this ruling, the 3PDs and TNCs are more likely to be on the hook for some payouts in that period. Things could get a whole lot messier for the apps if another court rules that Prop 22 itself is unconstitutional. Court tea leaf readers think that such a ruling is unlikely, but the final verdict is yet to emerge.
CHART TIME | Online Grocery Sales Slip in May
Brick Meets Click has released its May 2024 eGrocery Sales Report, showing the industry down $100M from a year prior, and way down from April. (Interestingly, in both 2023 and ‘24, April is a good ~$1.5B higher than May… what gives?) Order frequency fell 6%, while AOV nudged down almost imperceptibly. Ship-to-home (think meal kits) actually grew 9% YoY, while delivery inched up 0.2%.
AV | Cruise Launches in Houston with Fresh Funding
GM just gave its AV subsidiary Cruise a healthy shot in the arm: $850 million in new funding. “This will help bridge Cruise funding until we can find the right long-term capital efficient strategy, including potential new partnerships and external funding,” noted spokesperson Tiffany Testo. Cruise is taking that money and running to America’s oil capital, as the service is now live in Houston, albeit with modest ambitions. The company is starting off with just three cars on the road, operated by safety drivers, before expanding to supervised autonomous driving. This is in addition to its operations in Dallas and Phoenix; the company has yet to get permission to reintroduce its operations in California.
The Big Picture: It looks like things are starting to turn around for Cruise, which just six months ago was facing a much shorter financial leash, with GM cutting spending by “hundreds of millions of dollars” after the debacle in San Francisco. Not all is well in AV-land though, as Waymo has issued a voluntary software recall to its 672 robotaxis, after one traveling 8 MPH hit a telephone pole (oops!) in a Phoenix alley. Tesla is in trouble as well, with a court ruling that Musk & Co must face a suit that alleges it made misleading statements about its “Autopilot” and “Full Self-Driving” capabilities.
A Few Good Links
Visualize the differences between competing LiDAR solutions (Cruise uses Velodyne.) OSHA preps new worker heat safety rules (See Monday’s story on 3PD heat exposure.) Starbucks launches $5 & $6 value deals. Sea turtle stamps!!! Shipt teams up with Reese Witherspoon’s Hello Sunshine. Illegal Ozempic shipments sneak through e-commerce channels, ports. Temu returning customer count beats eBay. Consumer spending rebounds. QR codes fizzle, but “pay at table” may be saving grace. Erewhon shares app loyalty secrets. Longshoreman balk at port automation. Nordstrom readies new West Coast fulfillment center. Le ‘chop! Fedex cuts 2k European jobs. How restos can encourage direct ordering. 16 Handles founder dies at 44. Carl’s Jr, Hardee’s name first CTO. Resto sales forecast cut. How Rubio’s stumbled. TN curbs predatory vehicle booting and towing. Fisker issues OTA recall. ItsaCheckmate rebrands (no more “Itsa”) and adds voice ordering capabilities. Why DC is a micromobility leader. Deliveroo shares top burgers in Dubai and Abu Dhabi (yes, bacon is allowed…)
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