Sidecar is turning into a delivery business.
Up until the beginning of 2015, the San Francisco-based startup was primarily focused on using everyday drivers to shuttle people around town. Yet it was tough to keep up with fellow on-demand ride-hailing startups Uber and Lyft, which were raising mountains of cash and established themselves as the clear leaders in this new transportation arena.
But in February, Sidecar started rolling out a B2B play, partnering with companies like Eat24 that tap into Sidecar’s API to offer delivery of everything from groceries to flowers to power tools — and so far, the results speak for themselves.
Sidecar announced today that deliveries make up more than half of the company’s revenue in San Francisco, only three months after Sidecar launched the service. The company is also expanding its delivery arm to Brooklyn, where it has yet to launch ride-hailing.
Sidecar is still offering rides to people across ten U.S. markets; that’s what the startup originally set out to do when it launched back in 2012.
But it’s clear that the company is seeing impressive growth from delivery in a rather short timespan. In fact, today Sidecar also announced a partnership with Meadow to deliver medical marijuana in San Francisco.
Part of Sidecar’s secret sauce is the ability to utilize its robust logistics technology and network of drivers to deliver both people and goods — even at the same time.
“There is tremendous power in combining people and packages,” Sidecar CEO Sunil Paul told GeekWire.
Sidecar today also announced new, lower prices: Same-day delivery for $4.99 and one-hour delivery for $7.49. Also, if an order does not arrive on time, it will be free.
“We’ve created a breakthrough price point,” Paul said.
Paul noted that drivers are making even more money now that they can deliver both people and products, and that 95 percent of all deliveries so far have arrived on time.
We caught up with Paul to learn more about Sidecar’s delivery business and how it plans to compete in a crowded delivery space that includes players like Amazon, Postmates, and yes, even Uber.
Paul’s comments have been edited for brevity and clarity.
GeekWire: Thanks for chatting with us, Sunil. First of all, deliveries account for half of your business in San Francisco? That’s a lot.
Sidecar CEO Sunil Paul: “The delivery business is going really well. We have expanded into all kinds of deliver categories — hot foods, grocery, flowers, retail goods.
Now with Meadow we doing medicinal marijuana products. Part of what’s interesting is that this partnership really illustrates that we are capable of delivering all kinds of different products, including those that have complicated requirements. With this new capability, we have a subset of drivers that can only get requests for marijuana deliveries. The drivers have special training and each is already a patient from the same dispensary they deliver from. We’ve also upgraded our technology to enable rigorous ID-checking before a transaction can be complete.
If it’s legal and fits into a car, we can deliver it. It cuts to this idea of powering an on-demand economy. We can do it for Meadow, we can do it for hot food, we can do it for groceries.”
GeekWire: Tell us about the technology here. You’ve already built much of it with your original business of shuttling people around town, right?
Paul: “We are actually leveraging a bunch of new technology we built specifically for delivery. For example, being able to bundle multiple pickups and dropoffs, and being able to re-route those in real-time because of a new request that can still be accommodated within a delivery deadline timeframe. Or, things like being able to have a package in the trunk and match up with a rider going in a similar destination. That rider will never even know that there might be a package in the trunk.”
GeekWire: So are drivers making more money now that they can deliver both people and packages?
Paul: “They make more money for three different reasons. One, they can deliver people and packages at different times of the day — morning rush hour versus middle of the day versus the evening. There is more demand for package delivery in the day than during morning rush hour. They compliment each other.
Two, with different geographies, there is different kind of demand. When you take a delivery for a restaurant and head to a residential area, there’s not an opportunity to take a delivery back to the restaurant area. But, there are people that want to go from the residential area back to the restaurant area.
Three, there’s the opportunity to combine people and packages in the same car. The trunk can hold all kinds of packages. There are also seats in the car. Our idea is to maximize income for drivers and utilize the car as much as possible in all those three different ways.
From a driver’s perspetive, combining people and packages makes Sidecar really the best platform for a driver.”
GeekWire: There is a ton of competition here from both big and small players. Even Uber is starting to make a delivery push. How will you compete?
Paul: “First of all, the on-demand economy is growing very rapidly. There will be room for lots of winners. One of the biggest reasons for that is when you sell to a business, they don’t want a monopoly in their supply chain. Meanwhile, for consumers, the idea that Uber has 90 percent market share doesn’t bother them. But if you are a business, that’s not an acceptable state of affairs. It’s not uncommon for a business to ask for overnight service and give 60 percent of business to FedEx and 40 percent to UPS.
The other dynamic at work here is that Uber, since it has so much capital and is so big and so powerful, it threatens the business of lots of companies — especially those that want to have a relationship with the consumer around on-demand delivery. Uber has made it very clear that they want to deliver things to consumer. They are clearly intent on owning consumers for those relationships.
The bottom line is that people don’t trust Uber, and that certainly goes for businesses.”
GeekWire: What does Sidecar look like by 2016?
Paul: “You’ll continue to see delivery be more and more important for Sidecar. We don’t see it slowing down. There are indications that we’ll be a delivery-first company in the future.
One big difference with our app is that a destination is required from riders. The advantage it gives us in the delivery world is that we can match up a solo ride, where someone is taking an entire car, with a package. That is a Sidecar advantage.
We’re also growing fast in part because of the B2B model — we are selling the delivery model to the Meadow’s of the world, not to individual consumers. I’ve run consumer companies and enterprise companies, and the challenge with enterprise companies is that it takes a long time to get a deal done. But the advantage is that you can scale very, very fast.”