Call it the "Amazon effect," but consumers now expect options for two-day, and even same-day delivery. We want what we want, when we want it — from groceries to prescriptions to those sneakers you just had to have ... by tomorrow.
The boom in customer demand is also creating a boom in jobs — some 1 million people are employed as contractors in the on-demand space in the U.S. alone, according to consulting firm AlixPartners.
Major players from Postmates, with 150,000 couriers in the U.S., to Uber Eats, with 300,000 delivery drivers globally, are expanding in the tech and actual delivery sides of the business to keep up with growth.
"This is a white-hot market for jobs, particularly in grocery," said Bill Lewis, director the retail practice at AlixPartners. "The online demand for grocery is now about $20 billion for same-day delivery annually, and that's projected to [hit] about $80 billion over the next four years. There's a hot market for individual contractors and services to supply the labor for those deliveries."
AlixPartners estimates Amazon Fresh/Flex, Instacart and Shipt are among the biggest players in the industry. Beyond that, restaurant delivery services like Grubhub and Doordash are expanding their footprints by signing deals with companies like Yum Brands and Chipotle.
Other companies like Deliv, based in Menlo Park, California, offer scheduled delivery options. The company has tens of thousands of contractors in 1,400 cities delivering online orders for giants like Fresh Direct, Bloomingdale's and Best Buy. CEO Daphne Carmeli said Amazon changed the game with its launch of Prime more than a decade ago.
"This was during a time when the world was pretty satisfied with three-, five- or seven-day shipping. Prime came out with two-day shipping and very quickly it became the standard," she said. "There wasn't really a business out there that moved consumer goods that didn't have a consumer option, and the same thing is now happening with same-day. In the last 12 to 24 months, Amazon plus the on-demand economy has really set that bar even higher, that the time from purchase to consumption has really shrunk."
As a result, the company is hiring across the board from operations to sales to engineering, in addition to delivery people like Wendy Magarin. She cites the flexibility the job offers as one of the reasons she likes working as a contractor.
"I started working for Deliv because it has flexible hours — I can work the days and the hours that I can, that I want, and I can have another job on the side, which is good," Magarin, 42, said.
It's not uncommon for drivers to work for multiple services including Lyft and Uber, AlixPartners' Lewis said.
Beyond flexibility, analysts say pay is also favorable. Magarin can make some $25 an hour, well above the federal minimum wage. And in a recent economic impact report, Postmates said its couriers are making an average of $18.32 an hour.
"These jobs, particularly during surge times in larger markets, are paying significantly more than minimum wage," Lewis said.