Is There Such A Thing As An Ethical Gig Economy?

No. The economics of a scalable gig company invariably demand that the business screw its workers in order to build volume. There is no alternative that is financially viable. JL

Jenny Splitter reports in OneZero:

Instacart and DoorDash have been criticized for tip stealing and low pay. “With multiple years of all these multi-demand apps, we know that workers are going to be exploited and screwed at some point and their pay is going to be drastically reduced.” Allowing customers to decide what to tip is standard for delivery apps, and that the decision to remove the minimum gratuity options was made to attract more customers

When Louise Saler-Reinier started making enough to pay her bills by delivering groceries, she was thrilled. She had previously worked as an Instacart shopper in and around Chicago but had grown frustrated with low wages and customers who pulled their tips just after their groceries were delivered. Then she discovered Dumpling, a grocery delivery app founded in 2017 as an ethical alternative to gig economy stalwarts.

On Dumpling, couriers set their own rates, shop at whichever stores they want, and develop relationships with customers who book them specifically. For a monthly fee or $5 per transaction, Dumpling provides them with digital tools, puts their profiles in a searchable database that can generate business, and issues Dumpling credit cards that cover the cost of groceries until the customer can be charged.

Saler-Reinier joined Dumpling in February. Through dogged marketing efforts on Facebook and Nextdoor, she was able to build a sustainable business called “Louise Shops for You” and even had the option to set a minimum tip for herself. But this summer, the company began introducing changes she didn’t like. It added additional processing fees and started sending Dumpling marketing emails to her customers. What really pushed Saler-Reinier over the edge, though, was Dumpling’s decision to remove the minimum tip option. “I’m not going to stand here and let you treat me like Instacart,” she told OneZero about Dumpling.

While apps like Instacart and DoorDash have been criticized for tip stealing and low pay, Dumpling originally positioned itself as the worker-friendly alternative. “With multiple years of all these multi-demand apps, we know that workers are going to be exploited and screwed at some point and their pay is going to be drastically reduced,” Dumpling CEO Joel Shapiro said in an interview with TechCrunch in July. “We’re trying to make them ultimately have control so the rug can’t be pulled out underneath them.”

The company’s favorable terms have attracted more than 2,000 drivers to set up shop on its platform. In July, it raised $6.5 million in funding. But now Dumpling is facing a worker backlash of its own, with some drivers accusing the company of making changes that violate its promise of full autonomy.

This summer, the app began rolling out new monthly plans that charge processing fees for the Dumpling credit cards (previously there were none) and higher monthly fees: $49 for a pro plan or $99 for a “tycoon” plan for new drivers, up from just one plan priced at $39 in February. Both plans include new features like fraud protection against customers who don’t pay and an increase in the amount of non-grocery charges or “price adjustments” a driver is allowed to add as an extra charge, like for driving to a store beyond a driver’s normal delivery radius, for instance.

Then, on November 9, Dumpling notified couriers that it would begin charging an app fee directly to the customer rather than give Dumpling owners the option to pay it themselves and take it as a tax deduction, as it previously had. Dumpling said it would also give customers the option to add a tip after groceries were delivered (previously customers were required to add their tip when ordering) and remove the option for drivers to set a minimum gratuity. Now customers could avoid tipping altogether. That last tweak angered former Instacart shoppers like Saler-Reinier who’d been burned before by Instacart customers placing big orders and then deciding not to tip at all.

“I’m really not interested in working for Instacart Junior,” Saler-Reinier says. “The majority of us came away from Instacart and Shipt because we didn’t want to deal with zero-tip customers anymore,” she adds. What was appealing about Dumpling is that the company offered something different, “a way for business owners to control their business.”

Much of the backlash is happening inside the company-run Facebook group, which Dumpling encourages couriers to join. The group had around 500 members before the pandemic and now has more than 2,800 members.

In comments responding to a post from the company’s CEO shortly after the November changes, one Dumpling business owner commented, “How DARE you impose the platform fee on MY customers??” Another posted, “I’m screwed just as my business was taking off.” Yet another said, “A processing fee will turn people away and make it difficult to market against the big players.” And another said, “This is terrible. Giving Business Owners the choice for their own pricing model was the whole selling point of this business plan.”

There were hundreds of comments by the end of it, says driver Kate Wolfe, who has been a Dumpling business owner in the Seattle area since April, and “98% of them were negative.” The timing, right before Thanksgiving, especially bothered Saler-Reinier. “Right before your busiest shopping time of the year starts,” she says.

Dumpling ultimately delayed the changes until December 1 and even reversed some of them: Dumpling workers again have the option of paying the transaction fee rather than passing it on to the customer. Dumpling also suggested owners raise their fees to make up for losing the minimum gratuity option.

Owners like Robert Wehrle, an Ohio-based Dumpling business owner and a DJ prior to the pandemic, say that solution doesn’t work, because customers may be wary of a delivery option that appears to be charging a higher percentage fee, even if ultimately they would have tipped someone that same percentage. He says that despite explaining the change to his customers, more than 10 of them have said they’ll no longer hire him. “They think I’ve pretty much doubled my charge, though I didn’t,” Wehrle says. He prefers to charge a flat fee and set a minimum tip, telling his customers exactly what these fees are for: upkeep for his van and a fee for his time.

Dumpling isn’t budging on removing the minimum gratuity. Shapiro told OneZero that allowing customers to decide what to tip is standard for delivery apps, and that the decision to remove the minimum gratuity options was made to attract more customers. Still, the change is a real sticking point for Wehrle and the others. What they liked was the full flexibility to charge whatever fees they want in whatever way they want. “It’s supposed to be our business,” he says, “but now you’re taking that away.”

Wehrle is one of 13 Dumpling business owners who has been kicked out of the Facebook group entirely, barring them from what has been the company’s main communication channel. He and others say they were raising questions and expressing their honest dissatisfaction. (Shapiro told OneZero the company drew a “hard line” around a rule of respect.)

“It’s really hard to make changes and know that not everyone’s going to love them,” Shapiro told OneZero, adding, “Our mindset is what are the changes that are going to benefit the most business owners?” Dumpling owners are still able to shop at any grocery store they want and can charge whatever fees they want.

Most of the Dumpling couriers OneZero spoke with for this story said they still want to use the Dumpling app. Though their businesses have become successful enough that they no longer need to rely on Dumpling, the app is still part of their business model, especially since the app’s fraud protection protects drivers so they aren’t left footing the bill if a customer doesn’t want to pay. Ultimately, they feel the company created a place for them to grow their small business and then made changes in which they had no say. Saler-Reinier says the company has forgotten its place in the relationship. “I am your client, Dumpling,” she says, “and you are not listening to me.”