# #UberEVERYTHING, The $50 Billion Question: Can Uber Deliver?



## chi1cabby (May 28, 2014)

*Edit: The article is now inaccessible behind WSJ paywall. I will post the article in two more posts below.

http://www.wsj.com/articles/the-50-billion-question-can-uber-deliver-1434422042*

Investors are counting on Uber to upend the delivery business much as it has for taxis, but progress has been slow so far









By
DOUGLAS MACMILLAN
June 15, 2015 10:34 p.m. ET

Uber Technologies Inc. became one of the world's most valuable startups by creating a new way to transport millions of people in more than 300 cities. But using the same formula to upend the delivery business has turned into a slog.

For more than a year, the San Francisco company has been trying to build what its chief executive once called "an urban logistics fabric" that enables drivers who shuttle passengers with the tap of a smartphone to pick up food, grocery items and packages along the way. In a sign of Uber's potential, it has more than 200,000 active drivers, roughly double the size of the delivery workforce at United Parcel Service Inc.

So far, though, an Uber same-day delivery program launched a year ago with plans to sign up dozens of retailers has announced partnerships with just six. And one of those, e-commerce company Gilt Groupe Inc., says its arrangement fell short of expectations, partly because Uber was unable to insure high-priced items sold through Gilt's online store, according to a Gilt spokeswoman.

In recent months, Uber lost out on the opportunity to make deliveries in some cities for Apple Inc. andStarbucks Corp., which discussed tie-ups with Uber but then made deals with startup courier servicePostmates Inc., according to people familiar with the discussions. Popular food-ordering apps Eat24, owned byYelp Inc., and GrubHub Inc. also held talks with Uber but haven't reached any agreements.

A food-delivery service called UberEats, launched last fall to speed lunch and dinner items from popular restaurants to Uber users in parts of New York City, Chicago, Los Angeles, Toronto and Barcelona, sometimes has so few customers that drivers have to throw away food at day's end.

Uber says it remains committed to making deliveries and still is in an early phase of testing new approaches to the business. "We will continue to experiment and test new products that benefit both customers and the cities in which we operate," Jason Droege,who runs the delivery project, known internally as UberEverything, wrote in an email to the Journal.

A spokeswoman adds that response to UberEats "has been overwhelmingly positive." The service could expand to as many as 15 cities in coming months.

Rivals of Uber in the nascent world of on-demand delivery also are betting that the smartphone era is breeding a new kind of shopper who will want many kinds of products delivered as quickly as the hailing of a car.

Investors in Uber are enthusiastic about the potential, valuing the privately held company at $41 billion in its last funding round. Uber is in talks to raise a new funding round at a valuation of$50 billion or more, people familiar with the matter have said, roughly equal to FedEx Corp.'s stock-market value.

"There's nobody who has as big of a real-time logistics network than Uber," says Jason Calacanis, a serial entrepreneur who was one of Uber's first investors. "If they can make another business line work with this infrastructure, that could transform the business."

Uber, which had revenue last year of roughly $400 million and is planning to invest more than $1 billion in China this year, hasn't said publicly how big it hopes to become in the delivery business.

Bill Gurley, a partner at venture-capital firm Benchmark in San Francisco and director at Uber, says he has never seen a financial projection for Uber which includes revenue from deliveries. "This company is growing faster than any company I think there's ever been in Silicon Valley, and that's on the core product offering," Mr. Gurley says.

*Continued in two posts below:*


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## chi1cabby (May 28, 2014)

*Apple almost signed Uber to handle its same-day deliveries*
*http://www.cultofmac.com/326456/app...iveries&utm_medium=twitter&utm_source=twitter*


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## chi1cabby (May 28, 2014)

TravisK's bro Jason Droege runs #UberEVERYTHING (@jdroege): *https://twitter.com/jdroege?s=09*










_Uber says it remains committed to making deliveries and still is in an early phase of testing new approaches to the business. "We will continue to experiment and test new products that benefit both customers and the cities in which we operate," *Jason Droege,who runs the delivery project, known internally as UberEverything*, wrote in an email to the Journal.

Uber has tested deliveries of sushi in Barcelona, designer suits in Manhattan and condoms in Washington, D.C. Mr. Droege's team now appears to be focusing on UberEats.
_
*He joined the company last year from electrical stun-gun maker Taser International Inc. and was Uber CEO Travis Kalanick's classmate at the University of California, Los Angeles. The two men joined forces on their first startup, a file-sharing service called Scour.*


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## chi1cabby (May 28, 2014)

*Meet The Drivers Behind Uber's Food Delivery Service*
*http://www.wsj.com/articles/BL-DGB-42269*


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## IndyDriver (Nov 6, 2014)

I can't wait for the day Uber Everything turns to Uber nothing after they lose lawsuit after lawsuit and can no longer raise money.

Edit: I'd also be content with a complete turnover of management and a new Uber that treats its Drivers with some decency, but that seems unlikely.


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## Cooluberdriver (Nov 29, 2014)

IndyDriver said:


> I can't wait for the day Uber Everything turns to Uber nothing after they lose lawsuit after lawsuit and can no longer raise money.
> 
> Edit: I'd also be content with a complete turnover of management and a new Uber that treats its Drivers with some decency, but that seems unlikely.


May happen after IPO with board of directors and all.


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## GooberX (May 13, 2015)

Uber really places too much value in their app.

They are using drivers to provide cheap transportation and the price is fueling the demand.

They are wasting money in these other ventures, because they don't have that advantage of cheap drivers, and they won't work.

hey are using the same old app and think they will conquer every industry based on that.

Ummm, no.


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## chi1cabby (May 28, 2014)

*FedEx Isn't Afraid of Uber's Package Delivery Ambitions*
*http://time.com/money/3955857/fedex...ge-delivery/?xid=soc_socialflow_twitter_money*


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## observer (Dec 11, 2014)

Cooluberdriver said:


> May happen after IPO with board of directors and all.


Maybe,

http://www.inc.com/jeremy-quittner/facebook-votes-down-one-share-one-vote-proxy-move.html

Maybe not.


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## chi1cabby (May 28, 2014)

*On-Demand Companies Consider Outsourcing Delivery With Uber*
*http://recode.net/2015/09/03/on-demand-companies-consider-outsourcing-delivery-with-uber/*

_Some of the companies that talked with Uber were apprehensive about turning over a vital part of the business and the consumer data to a company with a history of aggressive business tactics._

_"In business, I don't ever want to play 'Game of Thrones,'" said one such founder. "I work only with the companies I have deep trust for."_


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## chi1cabby (May 28, 2014)

*Uber to Unveil Big E-Commerce Delivery Program With Retailers in the Fall*
*http://recode.net/2015/09/04/uber-t...-delivery-program-with-retailers-in-the-fall/*


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## chi1cabby (May 28, 2014)

*Continued from the 1st Post:*

*A lukewarm burrito*
Same-day delivery has become fiercely competitive, ranging from upstarts such as Instacart Inc. and Deliv Inc., which carry shipments from grocers and shopping-mall retailers, to technology giants Amazon.com Inc., eBay Inc. and Google Inc. Even Lyft Inc., Uber'slargest U.S. rival in ride-sharing, is exploring its own fast-delivery service, says a person familiar with the matter.

The business is a logistical quagmire. One recent evening, Jim Pekarek had 30 minutes to pick up a $7 burrito in San Francisco's Mission District and deliver it to a customer four miles away.

Driving for ride-hailing service Sidecar Technologies Inc., Mr. Pekarek fetched the burrito from Taqueria Pancho Villa, hurried back to his car, parked halfway on a curb, and sped off. But his recipient was nowhere in sight and didn't answer the phone.

After consulting a map, circling the block and talking to two customer-service representatives, Mr. Pekarek discovered there was a mix-up between 29th Street and 29th Avenue. He delivered the lukewarm burrito 30 minutes late to the customer, who had sent increasingly impatient text messages that included "Forget it."

"I'm wondering how this makes financial sense," says Mr. Pekarek, 33 years old, a videogame developer who picks uppassengers and packages for Sidecar, based in San Francisco. Sidecar wouldn't comment on its financial results.

FedEx offers same-day delivery in more than 20 markets, but such shipments are just a sliver of its overall business. Most customers are happy to wait a day or more for e-commerce shipments, according to Frederick W. Smith, FedEx's chairman, president and chief executive.

"I think there's just an urban mythology out there that the app somehow changes the basic cost input of the logistics business," Mr. Smith told analysts about Uber. "That's just incorrect." Uber declines to comment.

Uber has tested deliveries of sushi in Barcelona, designer suits in Manhattan and condoms in Washington, D.C. Mr. Droege's team now appears to be focusing on UberEats.

He joined the company last year from electrical stun-gun makerTaser International Inc. and was Uber CEO Travis Kalanick's classmate at the University of California, Los Angeles. The two men joined forces on their first startup, a file-sharing service called Scour.

Uber's network has one big potential cost advantage. Thousands of its drivers, including 22,000 in San Francisco, are constantly passing by homes and businesses, and those drivers pay for their own cars, gas, insurance and maintenance. Half of Uber's rides in San Francisco occur through UberPool, a service thatmatches passengers with othersheading the same way.

Mr. Gurley, whose firm is an early Uber investor, says the same technology could match packages and people along similar routes.

One of Uber's main goals with UberEats is to give drivers a way to earn income and stay on the road from 10 a.m. to 2 p.m., a slow period when drivers are prone to drop off the service, according to a person who has discussed the program with Mr. Kalanick. UberEats also keeps drivers downtown so they are nearby when people leave work.

Customers pay a delivery fee of $3, and participating drivers get $12 an hour plus $2 per order and temporary bonuses of as much as $20 a day to start making UberEats deliveries, drivers in Chicago say. Those rates may vary in other cities. Uber won't comment.

Uber drivers in major U.S. cities have average hourly pay of about $19, excluding out-of-pocket costs, according to Uber.

"As a driver, it's a win-win," says Ramon De Leon, 47, a former pizza delivery driver turned social-media strategist who drives a red Volkswagen Tiguan for Uber in Chicago. "We dedicate three hours of our day, and with a guaranteed base [pay] plus commission, it's well worth your time."

But delivering food creates new challenges for drivers, who have to get out of their cars to pick up the food from a drop-off point, store hot items in heated bags plugged into their cars' cigarette-lighter outlets and sometimes park illegally while they wait for customers to show up at the curb.

Mr. De Leon says some people have ordered UberEats unintentionally when they actually want an Uber. The company shuts off the delivery service at 2 p.m. and instructs drivers to throw away any remaining food.

He doesn't expect Uber to disrupt the food-delivery business as much as it has with taxis because it would be hard for Uber to expand beyond the two menu items it offers a day. "What Uber's doing is getting you a burger from a place you can't walk to," Mr. De Leon says.

Uber is also experimenting with bike couriers. Last year, the company started UberRush in New York, aimed at small businesses that see it as a more modern alternative to a traditional bike messenger service.

Shoppers who buy a new suit on Suitsupply's website during certain promotional periods can select UberRush as a same-day delivery option for $15 extra, compared with free one-day shipment from UPS. At checkout, Uber's software summons a bike courier to the retailer's shop in SoHo to pick up the suit and deliver it.

Retailers and customers can watch on a smartphone screen as a package moves across a map. "By being an Uber customer, I already knew how this service worked," says David Heath, co-founder of New York socks retailer Bombas, who has used UberRush to send socks across town.

Uber's smartphone savvy doesn't automatically win over larger businesses, partly because they often rely on complex enterprise software to track inventory and manage shipments.

For example, one national apparel retailer discussed letting Uber handle same-day deliveries from its Manhattan locations to nearby customers but decided to pass because Uber didn't have a way to link to the retailer's inventory-management software, a person familiar with the matter says.

If a customer ordered a shirt, Uber's software had no way of determining if the shirt was available in a specific size and color.

*Continued in post below:*


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## chi1cabby (May 28, 2014)

*Continued from post above:*

*Insurance problems*
Gilt hoped that offering free same-day delivery last December through Uber would appeal to last-minute holiday shoppers. But Uber's insurance policy covered only up to $1,000, forcing Gilt to use a local bike messenger for pricier items, including a $24,000 handbag sold in the promotion. "It was a worthwhile initiative overall that yielded incremental revenue," says a Gilt spokeswoman.

There was a different snag when Uber announced short-term partnerships last year to deliverhigh-end jewelry for Alexis Bittar Inc. to customers in New York. When the retailer got "multiple orders at a time, we could not secure that number of Ubers at once," says a spokeswoman.

Uber ended an experiment delivering toiletries and other household items in Washington, D.C., after six months. There was no minimum purchase price, which meant drivers could go across town to deliver a $1 pack of chewing gum.

"This rarely ever happened," Uber's spokeswoman says. Uber learned "what our users valued" and "areas where we can make the experience even better."

Many of Uber's favorite transportation tactics, such as raising fares to lure drivers onto the road during peak demand, won't work in the world of logistics, where shipments happen at a fixed price and in a specific amount of time.

"If you are running a supply-chain operation and it starts giving you 'surge' pricing of 30% more than you are used to paying, your transportation budget can get blown very quickly," says David Vernon, a logistics analyst at Sanford C. Bernstein and former executive at shipment giant DHL.

Uber won't comment on how many deliveries are needed for the business to be profitable. Sidecar's chief executive, Sunil Paul, says that "sending a driver to go pick up a $4.99 package and have them go spend 30 minutes on a delivery is not a profitable activity."

Mr. Paul is working to solve the problem through what he calls "bundling," or moving packages in tandem with people who are traveling a similar route. Hundreds of Sidecar drivers are now shuttling flowers, hot meals and even bags of weed, through a partnership with a medical marijuana service.

Sidecar says half of its rides in San Francisco are now package deliveries. The company guarantees Mr. Pekarek $22 an hour to $35 an hour when he does deliveries, more than he typically makes driving people. But he hasn't yet gotten a delivery request and a passenger at the same time.

A Sidecar spokeswoman says the reason is because most of Mr. Pekarek's deliveries have been hot food orders, which require faster movement. "People and packages in the same car are ideally suited for deliveries with bigger delivery windows such as two to four hours," she says.

In order for Sidecar and Uber to sharply increase delivery volume, both companies might need to direct drivers to pick up certain items at a specified time. That could cause a legal headache for Uber, which is fighting two lawsuits that argue drivers should be classified as full-time employees.

Uber has countered that drivers are independent contractors, citing their ability to choose which passengers they want to pick up.

"As Uber tries to exert more control over how and when the drivers are doing work, that brings them closer to an employee status," said Jeffrey Hirsch, a law professor at the University of North Carolina at Chapel Hill.

Jeff Holden, Uber's chief product officer and one of Amazon's earliest supply-chain executives, says Uber's delivery business is "still very nascent." Mr. Kalanick, Uber's chief executive, "is not about celebrating things that are not there yet. He likes to talk about what's really working in scale."

When Uber celebrated its fifth anniversary this month, there were subtle signs that Mr. Kalanick has reined in his ambitions.

"In a world where technology can deliver the ride you need within five minutes, just imagine all the other goods and services that you could one day get delivered quickly and safely with just the single touch of a button," he said. The comment was Mr. Kalanick's only reference to deliveries, and it came in the last 90 seconds of a 30-minute speech.

-Jack Nicas, Greg Bensinger and Laura Stevens contributed to this article.

Write to Douglas MacMillan at[email protected]


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## chi1cabby (May 28, 2014)

*Uber recognises mistakes in its Spanish strategy, considers move to VTC model, shuts down UberEats
http://novobrief.com/uber-spain-is-...al&utm_source=twitter.com&utm_campaign=buffer*


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## chi1cabby (May 28, 2014)

*Uber wants to deliver everything, not just people*
*http://www.wired.co.uk/news/archive/2015-11/23/jo-bertram-uber-wired-retail-2015*


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