Business Monday

Deliveries on demand: Apps at your service this holiday season

Claudia Rodas, Instacart “shift lead,” left, doublechecks a customer’s order as Personal Shopper Joel King, center, and Louna Nelson, right, complete the customer’s order. On Dec. 7, Instacart shoppers bagged orders at the register for delivery in the Whole Foods Market in downtown Miami.
Claudia Rodas, Instacart “shift lead,” left, doublechecks a customer’s order as Personal Shopper Joel King, center, and Louna Nelson, right, complete the customer’s order. On Dec. 7, Instacart shoppers bagged orders at the register for delivery in the Whole Foods Market in downtown Miami. cjuste@miamiherald.com

Time. This just might be one of the season’s most precious gifts of all.

You don’t want to spend what few spare minutes you have standing in line, do you? That is exactly what South Florida’s burgeoning network of “on-demand” delivery services are banking on.

The holiday season brings a surge of consumer business to these new services, which deliver transportation, groceries, packages, restaurant meals, last-minute gifts and that pie you forgot to make for the office party. Many of these capitalize on the so-called sharing economy, where a network of contract workers often use their own vehicles and spare time to deliver whatever your heart desires.

All of the new services are app-enabled, aggregating demand on mobile devices but fulfilling that demand through offline services, giving the consumer or small business one less chore to do when time is at a premium.

Coming on the heels of Uber and Lyft launching their ride-hailing services in 2014, this year brought a flood of new options to South Florida shores — including the expansion of fast-growing companies such as Instacart for groceries, Caviar for restaurant food, Shyp for packages and Postmates for, well, just about anything, including the wrapping paper you just ran out of. Need a drink and need it now? Klink, Minibar or Thirstie will deliver the party to you. One of the most recent on-demand entries in Miami is Amazon Prime Now’s two-hour delivery service.

As they ramp up in South Florida and try to gain mainstream adoption, many of these services hope to entice holiday-frenzied consumers to give them a try.

I use Uber, I use Instacart like twice a week, I love them. I’ve used Amazon Prime Now. I love Favor, too. They save me so much time. ... The traffic in Miami is horrible, so it is never just a five-minute trip.

Allison Langer of Coral Gables, photographer, podcaster and founder of writingclassradio.com

Coral Gables resident Allison Langer is already a convert. “I use Uber, I use Instacart like twice a week, I love them. I’ve used Amazon Prime Now. I love Favor, too,” said Langer, a photographer, podcaster and founder of writingclassradio.com. “They save me so much time. … The traffic in Miami is horrible, so it is never just a five-minute trip.”

Langer said she used the Favor delivery service recently to pick up holiday photos from the printer for a client, deliver lunches during meetings and dinners for her kids, even to go to her house to pick up the computer she left at home: “I pay a small delivery fee and tip the driver. For me, it’s worth it.”

To be sure, the industry is nascent, and most of these services will not give local customer numbers, revenues or other metrics to gauge success in South Florida. But some of them seem to be well-capitalized for staying power and expansion.

The promise of connecting mobile users with services through the click of an app has attracted more than $14 billion of venture capital into the on-demand economy since 2010, according to research firm CB Insights. About $8.3 billion of that total has flowed into the sector in the first three quarters of this year, with more than $6.6 billion in the on-demand heavyweights Uber and Airbnb. Some other notable fund-raises this year from companies that also service the Miami area: Lyft’s $530 million Series E round, Postmates’ $80 million Series D and Shyp’s $50 million Series B.

What’s behind this surge? Downtown condos and office towers swarming with millennials and their smartphones, for starters. These are the early adopters. Add to that technology that makes it easy to order and pay for a service you could do yourself — if you only had the time — and a growing “gig economy” of workers who commit some of their spare time to earn extra dough. Instacart, which delivers groceries from Whole Foods Market, Winn-Dixie, Costco, Petco, BJ’s Wholesale Club and, most recently, Total Wine & More in Miami Beach, is a case in point. (See “A peek behind the curtain at Instacart” below).

Instacart launched in San Francisco in 2012 and has since expanded into 18 metro areas, including the Miami area in May. Instacart connects customers with personal shoppers who shop for and deliver grocery orders, eliminating the need for costly infrastructure such as inventory, warehouses and trucks. It has raised nearly $275 million from venture capital heavyweights such as Kleiner Perkins, Andreessen Horowitz and Sequoia Capital, including a $220 million round one year ago, to support rapid expansion plans that included Miami. In 2014, it brought in $100 million in revenue, according to Forbes, which named Instacart “America’s Most Promising Company” in January.

Other services coming to Miami also capitalize on algorithms and near-universal mobile access in their target markets. Indeed, most of them launch their services in the affluent and millennial-rich urban core of Brickell to Midtown as well as the Beach, Key Biscayne, the Grove and Coral Gables, to the dismay of on-demand fans who live in other areas. Broward County has Uber, Lyft and ZabCab, as well as Shipt, which launched in August in South Florida for deliveries from Publix, and restaurant delivery company GrubHub, but Instacart, Caviar, Shyp and others are not available there yet.

A slew of services specialize in restaurant delivery. Caviar, owned by mobile payments company Square, launched in Miami in April and now features more than 60 curated restaurant partners, said spokeswoman Catherine Ferdon.

“Whether you’re looking to cater the office holiday party, host a festive get-together at your home, or take a night off from cooking and order-in for one, we’re equipped to handle extra holiday volume,” Ferdon said about the company’s first holiday season delivering in Miami. “With great local partners like Fireman Derek’s Pies for decadent desserts and Biscayne Tavern for bite-size apps, anyone can save time and leave the prep to beloved Miami restaurants.”

Kevin Kehoe, chef-owner of Sparky’s Roadside BBQ in downtown Miami, is both a restaurant client and a consumer customer of Caviar. “My girlfriend and I ordered from a restaurant last night. It was so easy, you see all the pictures, you pick what you want and it’s done,” he said. For the business, it’s also very easy. “The food arrives hot and the customer service is spot on,” he said. “It’s great for advertising — new people see it every day.”

Co-owner Hans Seitz, who is also a chef, said Sparky’s signed up with Caviar about eight months ago and that delivery business has steadily increased. Kehoe and Seitz tried several other services and methods before Caviar, including bikes, but none measured up.

Postmates, Favor and the locally based GoGetIt say they will deliver just about anything.

Favor launched here in July and services an area including downtown-Brickell, the Beach and Coral Gables. “We’ve seen a 25 percent increase in ‘Order Anything Favors’ during the holiday season, where customers are ordering items like eggs, sugar, flour, napkins, Solo cups and greeting cards,” said Tina Heileman, PR manager of the Austin, Texas-based startup. “We’ll be sending out a customer-wide email that shows customers how to order and send a gift using Favor. So for example, you could order a Poinsettia plant from Publix for your friend and have it sent to their house all via the Favor app in under an hour.”

The much larger Postmates also sees a holiday rush. “We can pick up and deliver essentially everything, so if there is a last-minute gift or someone has run out of wrapping, they certainly can use Postmates to get those items,” said spokesman April Conyers. Postmates, which has received more than $138 million in venture funding, has nearly 20,000 couriers across 40 markets who complete more than 1 million deliveries per month, Conyers said.

Liquor sales surge this time of year, and locally based Klink has been working to capitalize on that, hoping to convert first-time orderers to Klink regulars. The company, which also operates in Dallas and Washington, D.C., delivers beer, wine and spirits on demand. It has been experimenting with experiential marketing, including one campaign last month with Anheuser-Busch’s tequila-flavored beer, Oculto. Along with each order of Oculto, Anheuser-Busch and Klink delivered Lady Oculto for a live show of the product experience. Expect more of that, said CEO and co-founder Jeffrey Nadel.

“A big challenge is changing people’s habits, but really it’s no secret that going to the liquor store is not a great customer experience,” Nadel said. “We’re teaching customers there’s another option out there, and you don’t have to leave your family and friends. We think anyone can be a great host, and we want to provide the tools to do that.”

A big challenge is changing people’s habits, but really it’s no secret that going to the liquor store is not a great customer experience.

Jeffrey Nadel, CEO of Klink

Klink, which has seen increases in quantity and size of orders during the holiday season, started its service in the Brickell-Miami Beach-Wynwood corridor. It has recently added service to Sunny Isles, Aventura and North Miami Beach and will be adding Coral Gables “very soon,” Nadel said. It’s raising $1 million to fund its growth, which has been running about 30 percent month over month.

As the proliferation of on-demand delivery services continues, standing out in the crowd becomes critical, Nadel said. “The way we look at the business is more about how we deliver the entire experience to customers, connecting them with the best products for the experiences they want to have,” he said, whether it’s an intimate Italian dinner for two or a BBQ for 10. Mixologists on-demand and food pairings might be experiences the company will be offering more often, Nadel said.

Beyond staying nourished and buying gifts, well, you have to get around.

The wild popularity of Uber and Lyft has drawn other competitors to the market, including ZabCab, which is a ride-hailing app using only licensed taxi drivers and doesn’t use “surge pricing” during peak periods, like the holidays. The company recently announced that its data show that waits for taxi rides decreased by 77 percent, from 30 minutes to five to seven minutes in Miami, and it said it already has about 1,000 drivers in its network.

To encourage people to try the service, ZabCab will be running a safe-driving New Year’s holiday promotion offering free Starbucks cards after completing a ride, said Bob Knight, a spokesman for the New York-based company.

If you had one too many at a holiday party, the local (and sober) RedCap will drive your car home for you with a click of its app, and a new Miami-based service GasNinjas just launched to fill your tank on-demand.

How about moving your stuff? Roadie, an Atlanta-based startup, launched nationwide including in Miami this spring, capitalizing on the many drivers out there already going where your items need to go. Whether you are sending a gift to Aunt Marie in Philadelphia, need help transporting a Christmas tree to your apartment, or want to get a decanter from Boca Raton to Miami, as one customer did recently, chances are a “Roadie” could be your Santa Claus, said Marc Gorlin, CEO of the startup.

Drivers — the “Roadies” — get 80 percent of the delivery cost “for being a good neighbor,” he said, along with free roadside assistance and Waffle House coffee, and it is a more environmentally friendly way to ship because the drivers are going that way anyway. Senders get $500 of insurance free and have the option to buy more through the app. The startup has raised $10 million in Series A funding (the UPS Strategic Enterprise Fund and Miami resident Jim McKelvey, co-founder of Square and LaunchCode, are investors), and the app has been downloaded 225,000 times on Android and iPhones since launch this year, Gorlin said.

Last week, Roadie had one of its best days yet for holiday deliveries, or “gigs,” including businesses sending gifts to clients, and consumer-to-consumer deliveries of presents, cookies, hams and flowers. Out to get a small piece of the $90 billion shipping market, Gorlin said: “There’s someone going everywhere all the time, and what Roadie does is tap into this unbelievable unused capacity to help each other out.”

San Francisco-based Shyp will pick up, professionally pack and ship your packages through postal services for you, saving you from the hassle of packing boxes and the long line at the post office. Volume triples during the holiday season for the San Francisco startup, which launched in parts of the Miami area about a year ago. A spokesman said the company was too busy shipping holiday presents to participate in an interview for this story.

What’s ahead for the on-demand economy in South Florida? Take a look at what’s happening in San Francisco, New York City and even Austin, Texas, because those on-demand markets are much further along. Those cities have seen an explosion of food delivery apps in particular, and with heavyweights Amazon and Uber increasingly getting into the markets, some experts say a shakeout has already begun.

The U.S. food industry generated $643 billion in sales in 2013, and restaurants and bars contributed $543 billion more. Although e-commerce currently makes up a small slice of sales, a recent global Nielsen survey of 30,000 people found that one-quarter already order groceries online, and more than half were willing to do so. The numbers increased among the millennial subset.

Food delivery is expected to be one of the biggest battlegrounds in the on-demand industry in the next year with players cuch as DoorDash, Postmates, Instacart and GrubHub duking it out with tech giants Amazon, Uber and Google. Uber, for instance, has launched lunch delivery, UberEats, in a dozen cities already, although not yet in Miami. Amazon’s got AmazonFresh in some markets. Throw in Munchery, SpoonRocket, Sprig and others making waves in San Francisco and other top markets. Brands are beginning to embrace these players also. For example, Whole Foods has moved quickly to become a major grocery delivery player, and Instacart has helped the company increase the size of digital shopping carts.

Food delivery is expected to be one of the biggest battlegrounds in the on-demand industry in the next year.

“While on-demand is a relatively recent trend, consumer interest can come and go, and there won’t be room for a lot of those players who are maybe fourth and fifth companies within a certain on-demand vertical,” said Matthew Wong, a research analyst for CB Insights, in a webinar this summer. Other areas that might be ripe for consolidation, he said, are home services, laundry, transportation and short-term rentals.

Wong said CB Insights expects to see more development in infrastructure and services to serve the on-demand companies. He’s already seeing logistics and vehicle optimization startups, background checkers and companies that on-board contract workers for the 1099 economy.

There are now about 200 venture capitalists investing in the on-demand space, up from 20 five years ago, he said. Corporate investors are getting in, too — UPS, Google, Volvo, Comcast are a few of the players. Still, a recent CB Insights report said, if one extracts Uber and Airbnb from venture funding trends over the last two quarters, funding to on-demand services has actually decreased, perhaps a warning sign that venture interest might be cooling.

Speaking about Uber’s on-demand success, co-founder and CEO Travis Kalanick, who spoke recently at Miami Dade College, said a calming and joyful customer experience is key, but it’s also about time savings: “If you can give your customers their time back, that is the start of something magical.”

Nancy Dahlberg; 305-376-3595; @ndahlberg

A peek behind the curtain at Instacart

At the bustling Whole Foods Market in downtown Miami on a recent morning, the Instacart lane is four carts deep with “Personal Shoppers” preparing to check out. It might look like just a normal shopping experience, but powering the whole process is sophisticated logistics technology.

Instacart’s Personal Shoppers stationed at the Whole Foods can check their app for their assigned orders. The technology knows the speed of each personal shopper as well as the size of the orders, so orders are divvied up accordingly with appropriate time blocks to complete each one, said Lila de la Chesnaye, Instacart’s city manager for Miami.

Jose Donoso, who has been a Personal Shopper since June, is also one of the fastest shoppers, so on this morning he has eight orders. He said he typically begins an order by texting the customer to introduce himself. One order at a time, he pushes the cart and works through a customer’s list, texting the customer if a substitution needs to be made, often accompanied by a picture of the suggested item (the consumer can also indicate he does not wish to be contacted and the shopper uses his best judgment). The need for substitutions is minimized because Instacart gets a data dump from Whole Foods every night on what is in stock, , de la Chesnaye said, so customers can often know when they order if their favorite brand of organic eggs is available.

The Personal Shoppers, some of whom are employees rather than contract workers, get instruction on the proper way to shop, from how to keep organic products separate from other products to how to pick the perfect avocado based on the customer’s wishes. Technology including a mapping system helps them find what they need quickly, and they can scan the item to make sure it is the same one the customer wanted.

Once the personal shopper has finished the order, he hands it off and takes off with his app and the cart for the next order. A small team at the register rings up the groceries and bags them. Each order is double checked, down to expiration dates, by the shift leader, de la Chesnaye said.

The reusable Instacart bags are filled appropriately (pantry, fridge, freezer) and temporarily stored, so that prepared foods stay hot and ice cream stays frozen, in a staging area for the delivery people. The couriers collect the bags using a bar code-scanning system so they know they have the entire order, de la Chesnaye said. Customers can choose two-hour delivery or a scheduled time for $3.99. Prices for the items are the same as in the store. (That is not the case with Costco, where prices are marked up slightly.)

Nancy Dahlberg

A sampling of services

New on-demand delivery services are launching or expanding into South Florida all the time. Here is a small sampling of what is available to consumers, but most of them only service small parts of the metropolitan area. For all of them and others, just search your app store, download the app and follow the prompts to sign up. They are in the business of making it easy to order their service, which will typically include a delivery fee, and pay for it through the app.

Amazon Prime Now: Two-hour delivery service for Prime members, amazon.com

Instacart: Grocery delivery, Instacart.com

Shipt: Grocery delivery, shipt.com

Caviar: Restaurant delivery, trycaviar.com

Grubhub: Restaurant delivery, grubhub.com

Foodoozle: Restaurant delivery, northern Broward, FoodOozle.com

Postmates: General deliveries, postmates.com

Favor: General deliveries, favordelivery.com

GoGetIt: General deliveries, gogetit.com

Klink: Liquor delivery, Klinkdelivery.com

Minibar: Liquor delivery, minibar.com

Thirstie: Liquor delivery, thirstie.com

Uber: Ride-hailing, uber.com

Lyft: Ride-hailing, lyft.com

ZabCab: Taxi-hailing, Zabcab.com

RedCap: Drivers on demand, MyRedCap.com

GasNinjas: Gas fillups, gasninjas.com

Roadie: Uber for your stuff, roadie.com

Shyp: Package pickup, packing and shipping, shyp.com

Stow Simple: On-demand storage — even for those holiday decorations, StowSimple.com

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