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Comment by wil421 | Hacker News Reader

Webvan brings up old memories and I really thought of it as the future. My neighbors tried it a few times and I can remember it showing up. When I asked my parents to do it they thought I was crazy. Pretty sure cost had something to do with it. I’d still fill up a shopping cart just because.

Webvan failed but if the gig economy was around it could’ve succeeded for a time. These companies need non-employees to make it viable I believe.

Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up?

IMHO, robots will not be picking people up and delivering our groceries in the near future. Your business can’t depend on the weather. Gig economies are not good for the gig seekers long term.

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The hilarious part to me is how Webvan as deployed represented a cutting of scope. Originally they were going to sell everything. Groceries were the start-small compromise!

One valuable lesson here is that being correct but too early is the same thing as being wrong. Webvan vastly overestimated the speed of change. 20 years later and I still get most of my groceries from the corner store. I have friends who do mostly delivery, but that's still far from a perfect experience.

Another is that any startup should ask questions like: what do we think we'll learn, and can we learn that for less money? They spent $800 million finding out the answers to things like, How much do people want to buy groceries on line? and What are sustainable economics for grocery delivery?

They could have gotten the answers they did for less than 1% of what they spent. Build a web site, rent a few trucks, buy most of your groceries from the nearest grocery store, launch a limited test in your most favorable zip code. They would quickly have learned how viable it was, and the other $792 million could have gone to startups with more of a chance of delivering sustained customer value.

There was a grocery delivery startup called Grocera that operated in Waterloo region for a little while a couple years ago (https://www.crunchbase.com/organization/grocera). It's defunct now, but my wife ordered from them a few times, and was pretty sure it was one of the founders who showed up at the door, pulling the order out of the back of their own hatchback.

So much value in learning first hand about the experience first hand, both for the customer and the staff person.

> So much value in learning first hand about the experience

I couldn't agree more! I'm working for a startup doing alcohol/cannabis delivery. Before there was funding, our founders rode their bikes to do these deliveries (and have still done some deliveries in the past 6 months).

There was so many lessons learned from doing our deliveries. One such example: we had a bug where our push notifications told the customer we had arrived, but were actually still pretty far away (GPS math sure is fun :P)

Parent is extremely insightful. It shouldn't be downvoted.

I remember trying to plan a startup with a guy who did similar things. He'd let his imagination run away, and then try to compromise on something far beyond realistic.

I should have walked away sooner than I did... We went nowhere because every week it was another "Groceries were the start-small compromise."

Yeah, this is a common entrepreneur failure mode. You need to be ambitious and visionary to start a new thing. And investors love to hear the grand plans! Tempering that is one whole other skill.

That guy sounds like he was trouble from the beginning. But if you get in this situation again with somebody less crazy, one thing I've done is to draw a graph with a dot just above the zero point and then a circle at the top right. I get them to talk about their grand 20-year vision, and I explain that's the circle in the upper right.

Then I draw a bunch of tiny line segments that walk erratically toward the circle. I explain that each week we need to take one step in the direction of the vision. The I ask them to focus real small, and think of the tiniest thing we can do toward the goal, something that fits in a week. Once the have a few of those, I'll ask, "How can we prove that this step really went in the right direction?" (It can also be useful to pull in the Lean Startup framework of validating hypotheses here.)

Sometimes that's enough to get visionaries to start breaking it down. And sometimes it exposes that the person is only good at dreaming big, but is unable to actually execute. Either way, it can yield valuable info.

Wish I saw your reply sooner. That's a great technique. You're probably a serial entrepreneur, or someone very close to that.

> And sometimes it exposes that the person is only good at dreaming big, but is unable to actually execute.

In my case, I figured out the problem when we tried to write a business plan. We've kept in touch for years since, and seeing where he's gone, that assessment is pretty accurate. He always has big dreams, but he succeeds when he focuses on mundane tasks.

It's silly, because he had a hit with an app, but spent too much money developing it and lost money. If his dream wasn't as big, he'd be profitable.

This totally depends where you are. Here we are talking about the US but in the UK for example all the major supermarkets offer delivery for a small fee. In Canada Save-on-foods has a delivery service.

Sure, grocery delivery is commonly available here too. But what percentage of groceries are sold through delivery? That was the real thing material to WebVan's business plan. They were betting the rate of change was much higher than it turned out to be.

And I'll note that WebVan was betting on replacing supermarkets, so they needed much more dramatic numbers. A supermarket already has 90% of business up, running, and paid for. WebVan spent hugely just to get to approximate infrastructure parity -- something that turned out to be totally unnecessary.

> These companies need non-employees to make it viable I believe.

I'm curious about this. Does this mean that, once gig-economy workers factor in all the costs that are normally born by employers (Insurance premiums? Certain taxes? Mileage costs? What else?), that they are effectively making less than minimum wage? If so, why do they do it? If not, what is the intrinsic reason that this work must be done by contractors rather than employees?

  that they are effectively making less than minimum wage?

That's the whole point of the gig economy: How to pay people to work without paying them minimum wage by "disrupting labor laws".

Is that actually true, though? I've seen anecdotal reports from certain Uber drivers or whatnot, but I have not seen data. (It seems counterintuitive that such a huge amount of contractors would continue to choose that work over traditional employment in service jobs if it paid less.)

Uber published a study with 2014 data here that says their drivers make ~$20/hr not including expenses which they estimate at like $3/hr https://drive.google.com/file/d/0B1s08BdVqCgrZWZkV0ZfZnhGUGc...

This MIT study says $8-10 after expenses https://www.npr.org/sections/thetwo-way/2018/03/07/591430857...

Plus given that drivers could be trying to drive when there's no demand, its very possible for people to earn below minimum wage.

That's a long time ago. They've cut the payment substantially since then.

https://www.inquirer.com/news/uber-lyft-rideshare-drivers-ph...

Plus given that drivers could be trying to drive when there's no demand, its very possible for people to earn below minimum wage.

If you count every hour that people want to work regardless of whether their employer wants them to, there aren't many employers who pay minimum wage.

Thanks!!

It could be that they're not factoring in the cost and maintenance of their vehicles because they foresee this as being a temporary period of their life. They're borrowing from the future cost of their cars.

From my experiences with Gig workers, I used to work in the engineering part of an early one, there will be definitely a bi-modal distribution between full time and part time workers. There will be those that will only want to 'pay a bill' with the proceeds. There will also be those that buckle down and organize their lives/finances around it. For the former, it wouldn't surprise me that they're earning less than service jobs, all in. However, the freedom of choosing one's hours really is powerful for those looking for just a few extra hundred dollars, plus the emphermeral cost against one's vehicles is easy to overlook.

Definitely. A lot of current startup darlings are shifting costs traditionally borne by the business to the workers. Uber is exhibit A here. Taxi companies, for all their flaws, at least paid for, maintained, and took on most of the risk of the cars. With Uber, all of that is on people desperate enough to drive for Uber. This strikes me as woefully inefficient systemically; large organizations are much better placed to manage cost and amortize risk.

Or you could look at the recent DoorDash tip theft controversy, one of many such blow-ups. Anand Giridhardas has a lively discussion of that here: https://twitter.com/AnandWrites/status/1153312792964935682

I feel this is a little too cynical.

For example, maybe I want to make extra money but don't want to be tied to a shift. This type of flexibility is amazing for lots of people. It's very appealing if you need extra money, and have a lot of time. Unfortunately, this aligned in an economic cycle where people needed work, and undervalued their value as workers(and for sometime bonuses, and gamification made this type of work very profitable i.e. 4k a week driving uber in SF).

The gig economy is more about having workers without giving them benefits and with making the workers shoulder the burden of shifting demand throughout the day. With food delivery you have the lunch rush and the dinner rush and outside of those windows your demand is a lot smaller. The gig economy means the company isn't on the hook for predicting or satisfying that demand; if there's too many workers for the demand, it's the workers who take the pay hit rather than the company. And if demand spikes unpredictably the company has an easy lever to push to get more workers out there (just notify workers of the spike, and surge pricing as needed to make the unplanned demand more attractive to the workers).

So the gig economy is really just auto scaling applied to human resources instead of computing resources.

My guess:

You (as the business operator) need the flexibility of being able to pay only for work done, to adjust pay based on performance metrics very easily, and to avoid the otherwise heavy costs of traditional hiring and firing.

You don't want to be on the hook for guessing how many drivers you need on a given day or for a given area. By utilizing them as contractors, they naturally adjust their own numbers as work becomes highly available or scarce, and you're not on the hook to pay them when they're not contributing to your bottom line.

As for why the workers do it: In many cases it's likely not their best financial decision, but there is some value to them in the flexibility of the schedule. And the ones that get particularly good at gaming the system (to the extent that it's possible) might make enough that it beats comparable jobs.

This same factor applies to Amazon, McDonalds, Walmart et al: they pay minimum wage (though Amazon steals some back, though not as much as companies like DoorDash) but not really enough to live on; the balance is made up via a subsidy from the government (food stamps et al).

But those government-subsidized jobs count as "jobs" in the unemployment statistics so I suppose it's all good.

Gig-economy workers are working for cash, and most are operating at a net loss. That's one of the reasons why the mythology around "gig economy" is that people are just making extra cash on their downtime. All of these platforms push their contractors to accept more work for longer durations of time.

An Uber driver gets paid something like $0.80/mi for a trip that costs something like $1.05/mi. But the independent contractor doesn't factor in depreciation and maintenance well.

With employees, you generally provide employees with vehicles, reimburse employee expenses, or otherwise ensure that net pay less expenses are more than minimum wage. The average cost of operating a car for normal (not livery) use is about $0.55/mi. The number for an Uber is probably 30-50% more.

All of these bullshit gig economy businesses that require a car would be dead in the water if they had to pay real employees or deal with the compliance issues, worker's comp, etc.

This all sounds eerily close to data, which is what I'm looking for :) What is the source for your figures?

One source for the rates paid is: https://www.inquirer.com/news/uber-lyft-rideshare-drivers-ph...

The N.Y. Times published more detailed data last year iirc.

I used the GSA expense schedule for the standard mileage rate and various online sources (rural mail carrier reimbursement ($0.70), livery and van per mile estimates) to estimate the actual cost.

Better data exists on the expense side, but I didn’t go down that path due to time constraints.

Almost every one I know in the UK has their groceries delivered. According to the official stats it’s only 7% of grocery spend though.

This is definitely the kind of thing heavily influenced by location. I'm from the north and I don't know anyone who gets them delivered.

Where do you count as "the north" ? Plenty of delivery vans around in Manchester.

I think it’s more of an income thing than a location thing.

Most supermarkets will have a minimum spend and then there is a delivery charge on top. Both are pretty cheap but if money is tight then that is one easy convenience to go without.

I suspect there's also a social proof aspect. If five of your six closest local friends get their shopping delivered, you're very likely to try it yourself. If you don't know anyone who does it, you aren't.

I would be the outlier in that particular example but I think there is a fair amount in truth in what you said nonetheless.

I know people with not great income who use delivery due to working parents and can't afford a car, so ordering delivery from a large supermarket is cheaper and has better range than the walkable corner store alternative, and frees up a ton of time.

Ironically I find I spend less when shopping online too because I’m less likely to impulse buy stuff. Though I do often break the “don’t go shopping when you’re hungry” rule, which doesn’t help.

At least in the US, I go to the grocery store because I enjoy going. Because I buy so much online, and I telecommute, it's just my excuse to get out of the house...

... And, honestly, I'd rather buy fresh produce and perishables in person. The rest of things at the grocery store are usually cheaper in person.

Anyway, IMO, the real value of online shopping is that you no longer have those 3-hour trips from store to store to find that thing that everyone ran out of, or has poor selection. The grocery store for staples is the last thing online merchants can really replace.

I always chuckle when threads about shopping delivery come up on HN. It's part of the holy trinity of delivery, instant bank transfers, and the metric system, where Americans line up to explain why none of those things could ever actually work, despite the fact that they are working perfectly well in much of the rest of the world. There's something almost Onionesque about it [1].

[1] https://www.theonion.com/no-way-to-prevent-this-says-only-na...

The UK even has an online only supermarket, Ocado, though they seem to be partnered with Waitrose as they offer a lot of Waitrose branded products.

Maybe Webvan was before its time. Instacart is doing just that and has lots of partnership too e.g. Costco/Sprouts etc. They might just become successful.

I used webvan back in 1999, and it felt... ridiculous? Like they had to be spending a ton of money to bring me basic groceries? But 1999 was like that.

What I think they really missed is how much they were in the logistics business rather than the grocery business -- immediately. That's a seriously tough nut to crack and you have to be Amazon or Walmart or (now) Uber to really play in that space.

> Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up?

Maybe for prepackaged foods, but I hope not fresh foods like meats, veggies, etc. Most stores have a wide variety of quality in the same bin for any given food and I'd rather be the one to choose.

I love to cook and wouldn’t trust someone else picking out my groceries. Not to mention these things cost more.

I currently use Instacart (as an Express member).

I'd say 10% of orders (I order ~2 times a week) contain an item that wasn't of sufficient quality. Their customer support is great when this happens, always refunding the bad item (though sometimes that's besides the point -- I needed that item for my meal!)

The $100 yearly membership fee amortizes to ~$1/order, and the markup on products seems to be ~5-10%. So I'm paying a little extra to avoid going to multiple grocery stores on a weekend/weeknight

UK supermarkets have offered both a collection service as well as a delivery service for years. It’s great, you do your grocery shopping online and schedule a delivery or collection time and the supermarket does all the hard work for you. And the whole Thing costs a couple of quid.

It’s a great convenience.

My grocery store will do delivery through Instacart. According to Google Instacart adds $5.99 plus 10% of the order.

What does your store charge?

The market for delivery has evolved comparable complexity to mobile phone contracts, sadly:

https://www.lovefood.com/guides/3444/cheapest-supermarket-on...

So, you can use Waitrose, where delivery is free, but there's a £60 minimum order, and their prices are generally higher than the other supermarkets (Waitrose is the UK's high-end supermarket for moderately posh people [1]). Or you can use solidly middle-class Sainsbury's, where there's a £25 minimum order, delivery costs £1 - £7 depending on the time and day, but it's free for orders over £100. Or something else. Or sign up to a subscription plan which will work out cheaper if you get a lot of deliveries, etc.

[1] https://www.buzzfeed.com/floperry/of-the-most-middle-class-t...

As I said in my post, I normally pay £2. But the price is variable depending on time of day etc. I can’t recall what the minimum spend is but it’s way below our typical weekly spend anyway.

I remember a journalist did a story on webvan and how ridiculous it’s biz model was. They ordered a snickers bar, which was delivered by itself. The cost to deliver that snickers bar was multiple times the cost of the product.

Knew a person who worked there at the time and they said the problem no one could solve was optimizing logistics because they couldn't cherry pick their customers. One order could be halfway across town from the next, and they had to fulfill that in a timely manner.

> Grocery store delivery?

Amazon does this already with Whole Foods.

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