Photo: Cargo
Ride-sharers buy while they ride
People taking Ubers and Lyfts in some cities can now visit the convenience store on the way to their destination without leaving their seats, thanks to a startup called Cargo.
Cargo, which recently expanded to rideshares in the Los Angeles area, sets up drivers to double as convenience store clerks, as described in The Spoon. Drivers who sign up to take part are given a display box of items they can sell to riders (replenished each month) such as snacks, electronics, toiletries and cosmetics. Riders can order the products via Cargo’s mobile app. The driver then furnishes them with what they’ve purchased during the next instance that it’s safe to stop the car.
Cargo’s website explains that it is free for drivers to participate in the service without the need for an upfront investment. Top drivers can purportedly earn up to $300 a month.
The service remains available only in select markets, but the move into Los Angeles marks the next step in a plan of expansion into cities beyond the initial three: New York City, Chicago and Boston. In January, Convenience Store News reported that the startup plans to expand into the top 10 U.S. cities for ridesharing.
The appeal to riders who realize they’ve forgotten toothpaste on the way back to their home or who are struck with late-night munchies between bars is obvious. But the service does raise questions regarding safety as managing the purchases could cause a distraction to drivers. It is also not clear the degree to which rideshare customers will appreciate or accept being upsold when attempting to get from place to place, which could happen if drivers are dependent on the additional income Cargo provides.
But the service may be ahead of the curve when it comes to getting customers more comfortable buying things while in cars. Some have posited that in-car commerce is the next big technological frontier, led by trends like in-car voice assistants and, eventually, fully autonomous, driverless vehicles.
Discussion Questions
DISCUSSION QUESTIONS: Will rideshare customers take to third-party sales services like Cargo? Is this a channel that businesses selling other types of products should consider exploring? Are there potential downsides to the proliferation of apps like Cargo?
Poll
BrainTrust
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Christopher Jordan
Chief Business Officer, Hubba
While Cargo definitely takes “convenience” to a new level, and some passengers will certainly take advantage of the opportunity to purchase en route, I do not see this being a market-moving program. Satisfying the midnight munchies and replenishing the occasional tube of toothpaste may be helpful on occasion, I suppose, but it doesn’t feel like more than just that — an occasional convenience.
It is a great idea as long as it does not become a pushy sale. Customers love that Uber and Lyft does not slow you down with the end-of-ride transaction of taxi services. It is fast, easy and clean. No receipt, no fuss.
If positioned well, this can be a convenience driver. For gum, toothpaste and such — it works. However, also think about items like an inexpensive pay-as-you-go SIM card, or even a simple cellular phone while you are abroad. There is some potential here, as long as it does not swing to make the ride a pushy irritation.
While it won’t have universal appeal, the service has high value for certain customers. It has special appeal for customers who have forgotten something or have a situational need for a particular item. What’s not to like for the drivers? Their margins are relatively thin and they can add incremental incomes with no upfront investment. Cargo could be a solution and time saver in dense urban areas where commuting anywhere to get a single item is a challenge.
Cargo definitely has the opportunity to expand this type of service to other categories with smaller items that don’t have bulk or weight. The service could fit perfectly with click and collect at many stores. It will be an interesting AI challenge to solve for all of the route combinations and opportunities.
I understand the creative part of this. I question the safety part. I wonder why the need has been created? Have we reached the point where even our Uber/Lyft driver has become a mini-convenience store? What am I missing here? The need for this? Probably!
Many rideshare drivers already offer passengers bottles of water or small snacks out of the goodness of their — oh wait it’s for the tips. I wonder what percentage of the GP the drivers are able to take home from Cargo? Drivers might be better served continuing to offer these items as a free perk that leads to a better passenger experience, and in turn higher ratings and larger tips.
Everyone loves a treasure box and Cargo adds to the end user experience, but the increase in revenue per passenger will not be worth the effort for drivers. I think there is little to be gained when the bigger margin in tips comes from the gifting of water, mints, gum, a comb or a brush.
This is a natural evolution of a new frictionless commerce model and our near-constant attachment to mobile devices no matter where we are.
So leveraging convenience with consumer impulse purchase behavior and an always-connected and mobile shopper, Cargo and similar models will proliferate and winners will be based on ease of use, and the ability to operationally execute and scale profitably.
Seems like a clever idea at first, but I don’t think it’s a sustainable business model. Sure, if the car has that thing a passenger happens to need or will buy on impulse, they’ll appreciate it. Otherwise, it cheapens the ride experience by making passengers feel like fish in a barrel being targeted for a few extra bucks.
This is another example of engaging customers regardless of where they are. Apparently everyone is a potential consumer, whether they are working in a shared office space such as WeWork, riding in a rideshare or on a plane. Commerce is literally everywhere. However there has to be a balance and perhaps some boundaries.
While the convenience of buying products and services literally anywhere is enticing, there has to be a breaking point eventually of overwhelming and alienating customers.
Retailing today means you must be available whenever and wherever your audience is. This is one more great example of doing just that. Just wait until a major retailer wakes up and smells the potential. We won’t open our eyes each morning without being offered some promotion.
This is actually quite useful. The number of times we have stopped on an Uber trip for gum, water, candy, soda, etc. is a lot. Obviously, it’s going to be a niche service but it will likely have some success – dependent of course on how much of a premium is charged for products!
With the growth of ride-sharing apps, there’s significant money up for grabs — though I question if Cargo’s approach is going to be the winner.
There are a number of potential concerns with the model. Even if we assume the natural supply-chain challenges to be non-issues, there’s a baked-in limitation on assortment (cars are only so big) and with an advertised profit to drivers of $300 per month, what I suspect to be very thin margins.
I have a feeling the winners in the space will look something more like a Ritual for the ride-sharing space; in that they’re designing around existing retail infrastructure, but tailoring the workflow towards a specific audience.
This is another example of a new offering to appeal to consumers’ appetite for convenience. While this might not appeal to everyone, it will be a welcomed service for some passengers that are in “need” of one of the items in the convenience box.
It is like a point-of-purchase display at retail stores that capitalizes on consumers’ attention while they are waiting to stimulate impulse purchases. Some passengers that are bored during a ride may sift through the box to see if there is anything they want. It will be interesting to see how this unfolds and what’s next!
We’re ok with a mini-bar in a hotel room, why not have products available in a car as well? Cargo is an interesting move and I think it’s a play to get ahead of the curve. If they can create a beachfront for in-vehicle retailing, they’re in a great position to build the “vending machines” that will inevitably come with the autonomous vehicles in the future.
This is not a bad idea, especially if the assortment matches the occasion. Upselling $5 snacks to a pack of hungry college kids taking short Friday night trips is one thing. Offering $2 toothpaste to business passengers heading from the airport to their hotel (where they can get it for free) is another. Presenting $40 cigars from your humidor to young professionals on a guys-night-out is yet another.
There are plenty of rideshare “hacks” that are less noble ways to make money, such as logging out of the app just before bars close to inflate surge pricing, avoiding suburbs, upselling Lyft to Uber passengers, and driving customers to “recommended” bars/restaurants (sometimes even realtors) to earn referral fees.
So selling rolling convenience ala Cargo is a relatively ethical win-win when it works and a no-thank-you when it doesn’t.
While it may sound like one step closer to the world of Minority Report, this does make sense for incremental sales. Will it be a big hit and spread like crazy? I’m not so sure there really is a big market for these sort of impulsive purchases. It’s a slight convenience, but still feel a bit awkward to me. If it’s not done in a pushy way it may scale to a point of being worthwhile for most drivers. This is one to watch.