Can you train contractors without becoming a legal employer?

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The gig economy is a powerful force in commodity service markets, such as driving or “ride sharing.” More sophisticated services that require training, which courts have repeatedly ruled put companies in the legal position of employer, creating liability and increasing costs, especially legal costs, will reshape the development of business tools. The evolution of software – it is “eating the world” – points to the solution.

Federal District Court Judge Michael Baylson ruled in mid-April that UberBLACK drivers are not employees of the company because Uber doesn’t exert enough control over their schedules and they do not have to report to Uber employees. The Uber app controls the entire engagement between UberBLACK drivers, who can work when they want.

The ruling treats the Uber app as a tool used by the driver to fulfill the contracted service rather than a system of control. While the case may go as far as the U.S. Supreme Court and be reinterpreted many times, this distinction is critically important to the future of gig work arrangements.

The Society for Human Resource Management summarizes the scope of control issue: “If the employer will rigidly prescribe the manner in which the work is performed, that weighs toward employee status. Hiring an employee would be the safer course of action. If the organization is concerned only about the final product and does not need to dictate how the worker gets from point A to point Z, an independent contractor may be the preferred approach.”

We need new tools to enable professional-level services, not just simple commodity services, provided by contractors.

Brands have extensively documented, constantly evolving business processes that contractors must be able to follow reliably to deliver a customer experience consistent with their value proposition. With driving from place to place, the problem is simple. Uber and Lyft coordinate three things: Drivers; Cars, and; Passengers. Getting a passenger together with a car and driver to reach a destination is a relatively simple process, though hugely valuable, as evidenced by the companies’ more than $40-billion gross revenues. Likewise, dog-walking, package delivery, and other simple logistical markets.

More complex business processes, such as a sales engagement, retail interactions, professional services such as medical or therapeutic services, however, require a form of knowledge that has not previously been embodied in a simple app, a tool rather than a scope of control. These new software tools require sophisticated inputs, the ability to ask questions or provide information based on the customer’s circumstances and personality, and in many settings, a great deal of unstructured data needed to deliver the experience the way the brand requires.

These interactions cannot demand training before the contractor begins work. Based on repeated rulings, that training imposes a system of control.

Instead, a competent contractor needs to be prepared with general skills that can be applied to using a software tool that guides them through the brand experience in real-time. This demands software developers deeply understand a brand’s business processes to:

  • Guide the contractor through the correct information to share. For instance, if a medical worker on contract talks with a patient, they may need to be able to explain a HIPAA-related document and share it in the form the hospital company requires.
  • Understand feedback from customers inputted by the contractor to suggest media assets, next steps in the brand’s sales process, and other facets of the customer experience to the contractor as they exercise their skilled work.
  • Validate that processes are followed, as well as collect relevant data needed to refine the process in response to customers. The rapid evolution of brand experience demands that this measurement take place, or the company will miss key feedback it needs. The contractor can be coached to capture this data but may not be trained to do so in advance.

This merely summarizes a complex evolutionary challenge for on-demand services. Gig tools will certainly evolve from commodity services to refined high-touch services, such as prepared food delivery or online human services like legal services or therapy, which can be significantly improved by a greater focus on process. The transformation is just starting. I

Scope of control is a changing concept. The more easily a trained human can respond to process-led software, the less likely that person is to be treated by an employee. By moving the process to the edge of the network, into the hands of a skilled human who is able to modulate a branded experience, brands, retailers, and professional services firms can reduce centralized costs and move more compensation to the human provider.

Process-based apps are the path to improved contractor experience and brand experience. It also has the benefit of being less likely to result in labor litigation. We need better tools to complete the foundation of a prosperous gig world where flexibility is the primary driver of when and how people work.

Gig Economy Group Launches with New AI-Driven Business Process Management Platform to Drive Higher Sales and Profitability

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New sales enablement technology changes the way companies and associations can engage and support sales teams and members in a time of digital transformation

SAN MATEO, California. – April 19, 2018 – Gig Economy Group (GEG), a Business Process Management (BPM) Platform designed to enable direct sales businesses and membership organizations to create and support a more informed and successful independent sales force, today announced the launch of the company’s new technology and website. GEG uses proprietary AI (artificial intelligence) technology to help sales forces know “what to do next” to increase speed of on-boarding, increase engagement, retention and productivity of sales forces.

With the digitization of sales becoming more prevalent, sales teams look towards optimizing their strategies to become even more effective, efficient and productive. Sales enablement platforms need to continuously evolve along with digital transformation and have access to emerging technologies that improve productivity and speed administrative tasks in real time to dynamically deliver the most effective content to support each customer interaction.

Machine learning and a unique approach to AI enables GEG to harness the power of human knowledge and experience to proactively surface and present the most appropriate content or action for each individual user in every situation that they face. GEG uses this technology to help address the uniquely human and personal challenges of on-ramping into a new position, building momentum and confidence, and moving successfully toward business goals. This value enables sales, service and marketing teams to work more effectively to grow their pipelines, collaborate more effectively, move deals through the sales process faster, and increase win rates.

“We are proud to announce the release of a platform that empowers independent sales professionals an experience that helps them determine what to do next in the sales process to increase revenue generation”, said Dave Toole, Co-founder, Chairman and CEO of Gig Economy Group. “We combine machine learning and content marketing with our proprietary artificial intelligence workflow engine to optimize the sales journey. Imagine if you could determine which attributes would drive larger deal sizes, longer-term lifetime value and greater loyalty. This would change how a company assign territories, prioritize prospects and drive customer success management for existing clients. This is precisely why we developed the GEG platform.”

GEG Business Process Management Platform Features

  • Sales Enablement Technology: GEG leverages machine learning to proactively deliver sales training, consumer-facing content, and recommended next action steps that align with customer needs and drive more sales. The platform continuously learns, evolves, and becomes more powerful as the result of the human intelligence and actual sales data that it gathers and analyzes from across the entire organization.
  • Rapid Onboarding Meets Sales Effectiveness: Sales reps must acquire significant company and product-specific knowledge before they can successfully use their sales skills, which takes time and hinders their speed to market. GEG allows a sales rep to interact with the market immediately by bringing content and training to each sales rep, before they need ask for it. This dramatically decreases onboarding time and significantly increases sales effectiveness to drive revenue growth.
  • Proactive Next Steps for Every Sales Situation: The typical tool set for a sales rep is a portal for training, and another for content, which they must navigate to find the proper piece of content before continuing their journey. This process slows down sales momentum and frustrates your frontline. The GEG platform empowers sales teams by proactively delivering the content and training required prior to each next step in the sales cycle, aligning the company’s product with the customers interests and needs.
  • Data-Driven Insights from Machine Learning + Human Intelligence: GEG uses data-driven insights, machine learning, and ‘augmented emotional intelligence’ to harness the power of an organization’s human intelligence and experience in order to proactively surface and delivers the right information (consumer-facing content and sales training) and recommended next action steps for each individual user to take to maximize their opportunity for successful outcomes.
  • Measurable Business Results: By providing the content and training that aligns and supports a diverse sales team (in-house or remote), executives can immediately see the impact as related to their most important business metrics. With GEG’s AI-powered platform that minimizes time to market, sales rep enthusiasm and commitment increase, turnover falls, and sales and revenues increase.

For more information about the GEG platform, please visit our website at: www.gigeconomygroup.com or request a demo by emailing us at support@gigeconomygroup.com.  Stay updated on GEG’s developments and news by visiting our social channels at: Facebook, Twitter or LinkedIn.

 

About Gig Economy Group:

Gig Economy Group’s Business Process Management (BPM) Platform enables direct sales businesses (and membership organizations) to create and support a more informed and successful independent sales force.

The company’s software proactively delivers the customer content and sales training information that individual reps require at the moment they need it at any point in the sales cycle. To determine what content, coaching, and recommended next steps to present, GEG uses data-driven insights, machine learning, and ‘augmented emotional intelligence’ to harness an organization’s own collective human intelligence and experience. Through use of the Gig Economy Group platform, reps become more confident, productive, and successful, while companies experience faster onboarding, greater retention, increased overall performance, and growth in sales revenue.

Media Contact:
Beth Trier, Trier & Company for Gig Economy Group
beth@triercompany.com, 415-285-6147

Food Delivery, Part 3: Restaurant Evolution

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Prepared food delivered to the home from local chefs and restaurants is the most significant area of investment and activity in food delivery based on capital raised to date. The notion that prepared meals delivered to the diner will supplant home-cooked meals, as well as the need to shop for ingredients, as logistics matures is an article of faith for these companies and their investors.

Globally, food delivery companies are worth approximately $19 billion after initial public offerings by GrubHub ($8.7 billion public market cap), Berlin-based Delivery Hero ($8.9 billion), and London’s Takeaway.com ($2.42 billion). U.S. delivery companies have raised $1.45 billion in venture funding, led by DoorDash ($721.7 million), GrubHub, which raised $276.6 million in venture funds before its IPO, Postmates ($278 million), and Freshly ($107 million).

It remains to be seen whether the current $641.53 billion grocery store market, as measured by the U.S. Census Bureau will retain customers or lose them to the $799 billion restaurant industry as it expands into home delivery.

Technology is disintermediating meals and their makers. Logistics systems allow raw ingredients, prepped ingredients, or prepared food to be delivered in comparable timeframes. The introduction of platforms such as GrubHub and UberEATS has disrupted the traditional marketing and sales relationship that the restaurant maintains with the customer. So much of the restaurant experience that has revolved around the physical proximity of diner and server, the locus of upselling to increase average ticket price per diner, must be evolve in the age of delivery.

The growth in prepared food delivery justifies that reinvention. As many as 22.3 million U.S. consumers are expected to spend $22.4 billion on delivery food in 2018, according to Statista, which also projects the market will grow to $44.6 billion in 2022. Food delivery is more prominent overseas. China’s 2018 delivery revenue alone is expected to be $48.5 billion. For purposes of this analysis, the focus is the U.S. market.

The emerging market for prepared food delivery has focused on two primary approaches: On-demand ordering from existing restaurants ferried by a driver to the home, and; Centralized kitchens offering prepared food through their own or third-party couriers.

 

Overcoming moving targets, spoiling food

Restaurant delivery is more complicated than grocery and boxed ingredients delivery because it is time-sensitive. Customers who order a prepared meal are waiting for a meal delivery, where grocery delivery can take place in a longer  window of time. No grocery delivery service promises service in less than an hour, but every restaurant delivery suffers from each passing minute after it is boxed.

Sour Greenshoots Photography

An hour is an eternity in food service. Many delivery services, notably Uber EATS, emphasize the worst aspects of customer experience by requiring the customer to wait at the front door or curb for the driver. Phone in hand and dressed for the cold, I recently watched on the UberEATS map my dinner’s progress as the driver stopped for a pizza, got stuck in traffic, and ultimately arrived 20 minutes later than promised. The food arrived cold, and my customer experience consisted of the driver’s repeated apologies.

Nonetheless, prepared delivery is growing by leaps and bounds.

The NPD Group, a Chicago-based market research company, reported that delivery sales surged by 20 percent in 2017. App-based orders grew to 51 percent of delivery sales, as well. “Delivery has become a need to have and no longer a nice to have in the restaurant industry,” NPD Group senior vice president of industry relations Warren Solochek said. Diners order delivery or visit restaurants to pick up food more than 1.7 billion times annually in the U.S.

The U.S. market is dominated by GrubHub and UberEATS, which saw 2018 gross food sales of $3.8 billion and $3 billion, respectively. Second Measure, an analytics firm, reports that GrubHub accounts for 52.1 percent of the U.S. delivery market, while UberEATS took 19.9 percent in 2017. DoorDash and Postmates, the next tier of restaurant delivery services that account for 32 percent of the market, are reportedly discussing a merger to hold their position.

After deducting the cost of food, delivery providers take between 25 percent and 30 percent of the cost of a meal, which is tacked on as a fee. Out of this, they pay the courier, their marketing costs, and operating expenses.

GrubHub’s public numbers demonstrate how difficult restaurant delivery can be. While active diners increased by 77 percent in 2017, the company’s revenues reached $783.1 million, up only 26 percent year-over-year. On $3.8 billion in sales, GrubHub eked out a net income of $99 million, a margin of 2.6 percent. UberEATS, which said in December that it is profitable in more than 40 cities globally, did not disclose enough information to calculate a margin, but its delivery fees hover around 30 percent of the meal price.

 

Platform coordination meets the dinner rush

The traditional restaurant’s business model is under assault because logistics eliminates the ability to plan food purchases based on seating capacity. Restaurants have long been able to estimate how much food they need based on being able to seat and turnover tables a predictable number of times a day. With delivery, demand may soar one day and evaporate the next, leading to more dissatisfied customers on busy days or immense food waste on unexpectedly slow days.

Source: Meal Prep Delivery

Waste compounded by the time element in prepared food delivery increases costs, too. For years, pizza delivery companies have sought ways to keep pies delicious, even going to the extreme of completing cooking in the delivery vehicle. All food, warm or cold, spoils with the passage of time.

The time-honored tradition of sending back a poorly prepared meal is virtually impossible in the delivery era, and it would only amplify the difficulty of earning a profit from deliveries. Nevertheless, we believe diners’ sense of accountability will eventually empower them to send back spoiled food – the service is just too expensive to support a “no returns” policy.

Since local restaurants must decide to be on one or all of the local delivery services available, they face a daunting in-restaurant challenge: Managing inbound orders from multiple sources in addition to their management systems. Reuters showed in late 2017 an example of one location with five dedicated tablet devices needed to respond to orders on GrubHub, UberEATS, DoorDash, and other delivery platforms. The integration of delivery services into restaurant management systems should be a prime focus for the major platforms.

The primary argument in favor of the national and global delivery platform brands, such as GrubHub, UberEATS, Postmates, and DoorDash, is their ability to market and attract diners. They have concentrated more on delivery than merchandising and selling restaurants’ unique features. Consequently, specials of the day based on local ingredients or challengin to acquire ingredients such as fresh fish, are deemphasized in the ordering process.

Chefs who build a media persona can leverage the desire to taste their food, but delivery is a departure from the traditional world where chefs and waiters provided extensive information, explaining specials and greeting diners to build word of mouth. All these are absent in restaurant delivery. Customers are not likely to spend additional time while ordering required to upsell to the most profitable dish. Wine and beer sales, a staple of restaurant profit margins, are segregated to specialized delivery services designed to confirm customers are of age to drink. The opportunity to sell a dessert at the conclusion of the meal is missing.

We believe restaurants will need a more dynamic menu and selling system to communicate naturally with diners as they order – it will likely need voice interfaces and real-time chat or conversation. Consultative communication is the essential tool for individual or small chain restaurants to increase their profitability through upselling and specialization.

At larger scales, however, a media-savvy regional chef is enabled to scale their business using a platform in ways that were impossible before.

The old dream from the IBM commercial about selling a guitar to “every person on the Internet” flickers back to life here, but we are sophisticated enough 20 years later to recognize that exclusivity is essential for high-value experience to be attractive. Not everyone wants a guitar, nor do they all want Cat Cora’s cooking. But a lot more would like to try Cat Cora’s meals than can do so today. Connecting and staying engaged with a loyal and growing following based on extensive media asset investment does promise to make some chefs as ubiquitous as McDonald’s or Chipotle, which also have joined the delivery race.

 

Centralizing local food preparation

Meal times remain relatively fixed around the industrial workday. Such regularity has enabled a promising version of prepared food delivery, the centralized kitchen that prepares and serves meals via courier.

Souirce: Shopfitting Concepts

Peach, a Seattle-based startup, for example, developed a successful lunch delivery program featuring food from local restaurants prepared in a centralized kitchen. With $10.7 million in funding, it is a small player in an emerging locally focused approach to food preparation that focuses on serving offices with more than 50 workers. In essence, Peach schedules meals ahead of time, and so is able to order with clear supply requirements in mind and serve out large deliveries to increase efficiency.

Munchery, a San Francisco centralized delivery company assembles many chefs and staff to prepare a wide variety of foods, is taking the concept to the home. The company, with $125.4 million in venture funding to date, offers a wide range of a local food market without having to connect dozens of kitchens to couriers and, ultimately, customers. Like Peach, it enjoys better inventory management while offering a much broader array of foods than a single restaurant could.

Munchery and Peach’s focus on local ingredients also make this category the most sustainable form of prepared food delivery. As Millennials and Gen-Z age into adulthood, they will demand planet friendly services – 73 percent already do, according to Nielsen – and local sourcing is the most efficient and least environmentally taxing form of food production.

The centralized kitchen approach may also be the path for local restauranteurs to step into competition with national delivery services. Whether by offering their kitchen to share with other chefs or by moving into collective kitchens with a delivery component, local restauranteurs could achieve similar scale advantages as GrubHub or UberEATS. The local chef’s ability to differentiate by celebrating food in season, developing rituals around local foods and in-season specials, place them on a more intimate footing with diners than the national delivery platforms.

As restaurants, which face declining sales as the delivery tide rises, close or consolidate, the centralized kitchen appears poised to be the strategy of necessity for local chefs seeking to earn a living. These facilities, like major national players, must build around robust communication, an extensive library of food-related content, and local reviews and customer word-of-mouth programs that:

  • Provide context and expertise to diners seeking unique, not merely consistent, food experiences;
  • Respond quickly and efficiently to changing food supplies throughout the year;
  • Improve the utilization of food purchased and the profitability of food prepared and delivered;
  • Support the full-meal experience, including beverages paired with foods (which means establishing a method for providing alcohol with the meal), upselling of specials and high-margin dishes such as dessert, and, perhaps, home clean-up after a meal.
  • Provide transparent and fair payment for cooks, couriers, and the enabling technology companies.

In the final installment of this series, we’ll look across the three major categories of food delivery, groceries, pre-prepped boxed ingredients, and restaurant delivery to identify important themes for future development.

Marketing In A Box: On-Demand Food Delivery Goes Mainstream, Part Two

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Continuing our look at the on-demand delivery of food, which is becoming mainstream in 2018, it is time to explore subscription food delivery pioneered by publicly traded Blue Apron and HelloFresh in the U.S. and Europe, respectively.

Boxed meals provide curated ingredients and recipes to cooks who prepare the food at home. It is the second leg of a growing home delivery industry, one that provides potentially powerful marketing advantages compared to grocery delivery (see the previous installment). Like groceries-on-demand, these companies seek to relieve the customer of shopping for the raw materials of a meal. Restaurant delivery, which will be our next subject, seeks to displace food preparation altogether.

The meal-in-a-box model has even captured President Donald Trump’s attention. His administration has suggested “Harvest Boxes” of produce and cheese have been suggested as a new alternative to food stamp programs in the United States. Trump’s idea may be a prescription for monotonous eating straight out of the 1960s, but commercial food boxes have focused on providing variety, intriguing culinary choices, and add-on products, such as wine.

We believe subscription food services are the most flexible marketing platform among the food delivery competitors.

Born when there was an Uber for everything

The subscription food segment emerged in 2012, when HelloFresh and Blue Apron were founded on early enthusiasm for the Uber model. Like other on-demand businesses, these companies built deliberately as the infrastructure and data tools needed to coordinate logistics across the food preparation industry evolved.

HelloFresh, based in Berlin, raised $364.5 million in seven rounds before launching an $393 million IPO in November 2017. HelloFresh stock has added 47.5 percent since its debut. Last month, the company acquired GreenChef, a Denver-based sustainable ingredients subscription food company in its first acquisition.

Boxed Food Customers Skew Younger, Look For More Growth Ahead

Blue Apron, which went public in June 2017, has struggled by comparison. It’s shares are down almost 37 percent since its IPO. The New York-based company had collected $199.4 million in funding over six rounds. The company lost customers during 2017, falling 27.9 percent from 1.036 million customers in the first quarter of 2017 to 746,000 as of December 31, 2017. This may be due to seasonality in Blue Apron’s business – cooks may prefer to shop for holiday meals.

However, HelloFresh says its active customer based increased by 68.6 percent in 2017 to 1.45 million across the U.S. and European markets. For now, HelloFresh is certainly the market leader.

Unlike the market for grocery and restaurant delivery, the boxed food business is not primarily a time-saver at meal-time. As noted previously, shopping takes between 4.45 hours (among men) and 6.35 hours (among women) of time each week.

Boxed food is designed for people who savor cooking and the time it takes. It represents an opportunity to change the mix of products a cook uses, and so should be considered a direct competitor to high-end grocers, such as Whole Foods or Trader Joe’s.

Scale & Optimization

The on-demand economy is the result of converging logistical, marketing, and data management capabilities. The boxed food delivery model is the most dependent of the emerging food businesses on continuous optimization of its processes because of the higher fixed costs of operating food processing and distribution centers.

Unlike grocery delivery, which is dependent on the stock at a local supermarket, or restaurant deliveries, which also rely on a third-party to gather and prepare food, boxed deliveries are a closed supply chain to be managed. New categories of food may be added, but at the cost of added management overhead associated with food production and safety regulation. Where Instacart can add a product for a consumer by having a contractor-shopper toss it in a grocery cart, box food suppliers must plan to modify their recipes, acquire food, and plan for weekly acquisitions to make a change to their offerings.

Boxed food delivery enjoys few of the scale benefits of on-demand businesses such as Instacart and Uber. Full-time staffing in food delivery is tightly linked to the number of partnerships and supply chain sources that must be managed. Built around distribution centers, these organizations must staff heavily to certify food safety, manage preparation, and ensure timely delivery. Blue Apron reported 3,938 full-time employees in January, 2018, three months after laying off six percent of its workforce.  HelloFresh employed 2,715 at the end of 2017 and added 600 employees with the GreenChef acquisition in March.

HelloFresh, Blue Apron, GreenChef, and others, such as Chef’d, which markets top chef-recommended recipes, or Martha Stewart’s Marley Spoon, which delivers seasonal ingredients, must engage in deep partnerships with growers, distributors and shipping partners to ensure profitability. Like a grocery store, the box delivery companies must work to minimize food waste, which can be a crippling cost. And the boxes used represent a sustainability issue, as they become waste in the consumer’s home after only one use.

Compared to the average revenue per employee in the grocery industry in the fourth quarter of 2017, which was $438,138 according to CSIMarket.com, HelloFresh and Blue Apron have made excellent progress. HelloFresh, at $333,296 per employee, and Blue Apron’s $221,238 per employee are progressing toward parity with grocers. This suggests that with a full range of differentiated menus and established supplier relationships, the companies can compete effectively with both grocery and restaurant delivery as consumers’ eating habits change.

A marketing platform, not simply a fulfillment system

Boxed food is curated food, making the industry a natural marketing platform. Because the delivery box is a marketing stage, in which the customer must be delighted and surprised to feel they’ve received their money’s worth, HelloFresh and its competitors are better positioned to increase sales per customer and to introduce variety into their product.

Being able to add new ingredients, mix in novel recipes, and up-sell complementary products, such as wine to go with a boxed meal, these companies can market more effectively than grocery delivery competitors. By contrast, a grocery delivery company cannot pull out an item their customer explicitly ordered to provide an alternative sample, even if it’s a better flavor or deal. Customers don’t want their choices overruled.

Ingredient box customer engagements are defined by the number of servings to be produced using the ingredients in a box. Two- and four-person packages are the norm in boxed delivery, but the variety of ingredients can be changed daily to accommodate changing tastes. The model also does not rely on the cook to select foods, but offers a “best-of” experience that cooks expect to see change. GreenChef, for example, varies ingredients by season and is exploring local food sourcing in some regions.

HelloFresh reports that it currently is “mostly focused on weeknight dinners” and is experimenting with breakfast, lunch, and weekend premium meals. It distributes seven to 12 different recipes and plans to expand the options. Growing variety will be essential to retaining customers, who can become bored eating the same foods. Selection of more profitable products, premium programs with higher price points, and in-box offers provide subscription box food companies with greater marketing power than delivery-only providers in the grocery and restaurant markets.

The human touch defines curation and it is the soul of marketing.  Boxing foods and recipes, adjusting delivery timing and personalization of box contents to address food allergies, and integrating content, such as chef-lead cooking programs, are pathways to introducing many more products to the customer. These moves will come at scale, as HelloFresh and other experiment with segmentation and improved meal planning, which will amplify the variety of food experiences available.

The box may contain the seeds of a transformation in food marketing. Because of the planning and merchandizing involved in box food delivery, we believe it will remain an important part of alternative food distribution for years to come. Now, newer companies are emphasizing specific cuisines, for example, or the use of sustainable sources. We believe local food boxes can become successful based on direct-selling and grocery partnerships.

Yet the boxed food market will take time to evolve, perhaps more slowly than the contractor-based alternatives. But the prospect of deep curation of food, which can cut waste, improve diet, and reduce the complexity and cost of food supply planning make this a compelling sector for continued investment.