On-demand economy: Can your Uber double as a vending machine?
Need a breath mint for the road? How about an energy drink, a granola bar, a phone charger, earbuds, a hangover remedy or lip balm?
Those products and more may soon be peddled in your next Uber ride, thanks to a partnership between the ride-hailing company and New York startup Cargo. It starts Thursday in San Francisco and Los Angeles with plans to scale broadly to many of the 500 cities worldwide where Uber operates.
“It’s great when drivers offer gum or water to show hospitality,” said Keith Hensley, a member of Uber’s business development team. “This will provide even more amenities for riders.”
“It’s great when drivers offer gum or water to show hospitality.”
Keith Hensley, Uber business development team
Lyft drivers can also sign up online to offer Cargo sundries. The difference is that Uber will be easing and promoting the process for its drivers.
Cargo is among a pack of companies who see Uber and Lyft cars as marketing machines on wheels. Other startups pay drivers to wrap their cars in ads, mount rooftop electronic billboards or install backseat video screens. Analysts say the burgeoning trend may presage ways rides in self-driving taxis will be financed.
Cargo provides a clear box filled with snacks and sundries that straps to the console between the driver and front-seat passenger. It draws power from the cigarette lighter for two USB charging ports and illuminates when it’s opened.
Participating is optional for Uber drivers, who can order Cargo boxes online or drop by a Greenlight Hub, Uber’s in-person driver support centers, to pick one up, along with a month’s supply of wares.
Passengers scan a QR code to select items for purchase, covering the cost with any payment system on their phones such as ApplePay, Venmo or Google Pay. The driver opens the box and hands out the goodies.
“These (ride-hailing) cars have all the necessary supply and demand for a marketplace,” said Jeff Cripe, Cargo CEO, who co-founded the New York company, starting with some simple boxes and snacks he bought on Amazon. After testing the concept and going through the TechStars incubator in Detroit, Cargo officially began operations a year ago and has $7.3 million in venture backing.
Drivers make 25 percent of all sales plus $1 per item. So far, about 7,000 active drivers in seven cities have averaged about $100 a month in income using Cargo, the company said, with the top 10 percent bringing in $300 a month.
Cargo boxes include up to a dozen items, including a few freebies — samples that manufacturers seek to get into customers’ hands.
“Brands want to reach consumers in their moment of need,” Cripe said.
The company customizes the selection based on season, time of day and drivers’ frequent destinations, such as the airport.
Frequent morning drivers might get bottled coffee and breakfast bars, for instance.
Uber won’t make any money on the snack sales, as it wants drivers to reap the financial benefits, Hensley said. The startup gave Uber an unspecified equity stake in exchange for the exclusive deal, a year in the making.
Cargo had eight employees six months ago; it’s now tripled and expects much more growth.
“Knowing Uber is behind it adds a massive air of legitimacy for drivers and riders,” Cripe said.