DoorDash is diving into the ultra-fast grocery delivery game. It said this morning that it has opened a warehouse in New York’s Chelsea neighborhood—a so-called DashMart—that stocks more than 2,000 grocery items, household goods, and prepared foods. Customers in the delivery radius can order items (for free if they have a DashPass; otherwise, it’s 99 cents or $1.99), and DoorDash says a courier will e-bike them over in 10 to 15 minutes.
New Yorkers may find themselves asking if every city block now has a ghost grocery store promising rapid delivery, and the answer is yes, pretty much: A growing number of storefronts sport names of startups like Gorillas, Jokr, GoPuff, Buyk, Fridge No More, and 1520, most of which are mere months old. The ultra-fast grocery delivery model has already proven itself overseas in Europe and India, but started catching on in America only once the pandemic disrupted in-person shopping. Here in the U.S., no brand has cornered the market yet, despite more and more options materializing in Europe. (Among them: Getir, Rohlik, the Uber rival Bolt, plus the Finnish company Wolt—which DoorDash purchased last month for $8.1 billion.) America’s established delivery apps see opportunity; rumor is Instacart is about to jump in, too. It’s no surprise DoorDash says to expect “more locations and partners coming over the next few months.”
However, its entry does create one big potential headache for the company. Until today’s announcement, it had always rebuffed calls to consider its deliverers bona-fide employees, preferring instead the “contractor” label used by other companies in the gig economy. But 15-minute-delivery rivals like Gorillas and Jokr use full-time employees who are paid a set (and often higher) hourly wage. In its press release, DoorDash said it agrees this model makes the most sense, so that’s how it is categorizing the DashMart delivery crew. It’s formed a brand-new subsidiary called DashCorps to employ these workers, who will reportedly earn $15 an hour plus tips and can qualify for benefits “that traditionally come with employment” (insurance, Employee Assistance Programs, FSAs, commuter benefits, and the like).
Perhaps anticipating pushback, DoorDash has put up a full blog post today that explains this move:
The work associated with powering instant delivery from DashMarts is fundamentally different from dashing, and it requires individuals looking for a different type of work. DashCorps employees will complete a variety of tasks beyond delivery, including shelf-stocking, customer support, and administrative work. They’ll work set schedules, working an average of around 20 hours per week, with many working full-time; wear uniforms; report to a manager; and use a new app designed specifically for their unique work.
But it means DoorDash will now oversee two sets of employees: one group paid a living wage with benefits, and another set of contractors who earn around $3 an hour before tips and typically have to pay their own medical bills for injuries that occur on the job.
At a time when strikes are sweeping America from the New York Times to John Deere, but rocking the delivery apps particularly hard, this two-tiered worker setup may cause DoorDash new problems.