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Rapid Delivery Apps in Los Angeles Are Facing a Reckoning
Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
After a couple of years where pandemic lockdowns made lightning-fast, app-based delivery essential, the industry is facing a shakeout—and apps that promise delivery under 30 minutes are facing an existential crisis.
The so-called “dark store” model – which forgoes the traditional corner store for a sprawling warehouse that delivers through mobile apps – exploded during the pandemic. But many of those companies are now struggling to become profitable, largely because of rising overhead costs.
The Industry and the Challenges
At stake is a multi-billion industry aiming to deliver everything from groceries to convenience items and hot food, through bikes, cars, drones and even robots. Operating from a number of competing platforms, those companies saw sales more than double during the pandemic. Few experts see the industry disappearing entirely, but the sector is widely expected to shrink. The coming months and years will determine which model wins out.
Celia Van Wickel, senior director of digital commerce for analytics and brand consulting firm Kantar Group, told dot.LA she expects the bubble to burst—and soon, as venture firms become more discerning about their investments.
“Valuations are declining [and] money is not being forthcoming to rapid delivery companies,” Van Wickel said. Even as the economic climate becomes more challenging, some companies do have the chance to rise above the fray and gain market share – and satisfy investors – while others could be destined to go bust.
“[Investors] really want to see a profitable model, kind of akin to what we've seen in the dot-com era, where the bubble burst on ecommerce,” Van Wickel said. A lot of money was thrown into these new companies, they weren’t really profitable and then all of a sudden a lot of them collapsed.”
Some venture capital firms were “just investing to invest,” Van Wickel added, to see how the delivery market fared. She predicts they’ll soon become more judicious about who they fund. Burning cash without turning a profit isn’t going to be acceptable in the long term, she added.
Along with slackening consumer demand and less VC investment in the space, nearly every fast delivery company that relies on fulfillment centers, even Amazon, is going to face steep real estate, upkeep and staffing costs. Rapid delivery firms will need to spend big on real estate to operate fulfillment centers across cities that enable them to get to consumers fast.
Local startups Serve Robotics, URB-E, Kwibot and Duffl are trying to rise above the fray by delivering fast, to specific areas, with scooters or drones, but there’s no guarantee of success.
Image courtesy of Duffl.
Philadelphia-based GoPuff, one of the largest new rapid delivery services to enter in Los Angeles alongside DoorDash, Instacart and Uber (which also offer convenience delivery in addition to food) depends on having quick access to warehouses throughout the region. It bought liquor store chain BevMo in a bid to gain access to lucrative (and hard- to- get) liquor licenses and warehouses. It aims to save money by installing micro-fulfillment centers “within almost every” BevMo store that can service deliveries, its CEO told the L.A.Times. Still, it laid off 10% of its workforce in July after cutting about 3% in March, and shut 76 warehouses. GoPuff originally had plans to go public in mid-2022 at a $15 million valuation, but shelved them.
But GoPuff is not alone. Instacart cut its valuation forecast by 38% in March citing “poor market conditions,” and international rapid delivery startups like Gorillas, Getir and Zapp have also cut staff recently.
The layoffs suggest that rapid growth may no longer be enough.
“The GoPuff CEO basically said, ‘hey, we were getting a lot of investments by just showing top line incremental growth,’ they were growing customers and growing markets and that was okay enough for investors in 2021,” Van Wickel told dot.LA. “But now they're being pressured to really look at how their company is profitable [and] they're being asked to do this very quickly, or their investment will not be forthcoming.”
GoPuff pointed dot.LA to a recent shareholder letter that said it is “already driving 76% [year-over-year] sales growth for the core business.”
“GoPuff is the only company in this space that has proven it can be profitable at a city and regional level,” co-founders Yakir Gola and Rafael Ilishayev wrote. “We are now targeting full company profitability in 2024 while maintaining a strong cash balance throughout.”
An URB-E rider hauls deliveries in Santa Monica. Image courtesy of URB-E
The Opportunity
Despite the headwinds, the rapid delivery industry “feels like it's here to stay,” said Alex Vasilkin, co-founder and CEO of Cartwheel, a Hollywood-based startup that makes delivery management software and recently raised a $3 million seed round in April.
“There’s all these dark kitchens opening, there are all these different startups popping up with drone delivery, and scooters delivery and hyperlocal, 15-minute delivery so I feel like there’s more options for customers and so far, we've seen it getting bigger and bigger,” Vasilkin said. Cartwheel works mainly with restaurants, but is looking to find “very big partners in mostly the alcohol space,” its co-founder Magdim Metshin told dot.LA.
The need for rapid delivery isn’t likely to disappear so long as people decide they need items fast and can’t make the trip themselves. The question is now “which companies can iron out their paths to profitability before they’re forced to go bankrupt?,” Van Wickel said.
“I think there's a balance between what the consumer wants and what behavior’s going to change,” she added. “To me, it's all about on-demand. So we're changing the model to an on-demand model… it’s changing the trip occasions out there from stocking up to more grab-and-go convenience models.”
Startups that seem poised to weather the storm are the ones that can control every aspect of the business – including supply, warehousing, distribution and, crucially, their apps. Usually, they’re seeking buyouts from larger companies that have existing infrastructure in place for this exact reason.
“I don’t think we have quite a winner yet; I think there’s [companies] that are more set up to win,” Van Wickel said, adding that it’s mostly “the companies that do have some cash on hand today to continue to iterate their business models.”
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Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
https://twitter.com/samsonamore
samsonamore@dot.la
Here's How To Get a Digital License Plate In California
03:49 PM | October 14, 2022
Photo by Clayton Cardinalli on Unsplash
Thanks to a new bill passed on October 5, California drivers now have the choice to chuck their traditional metal license plates and replace them with digital ones.
The plates are referred to as “Rplate” and were developed by Sacramento-based Reviver. A news release on Reviver’s website that accompanied the bill’s passage states that there are “two device options enabling vehicle owners to connect their vehicle with a suite of services including in-app registration renewal, visual personalization, vehicle location services and security features such as easily reporting a vehicle as stolen.”
Reviver Auto Current and Future CapabilitiesFrom Youtube
There are wired (connected to and powered by a vehicle’s electrical system) and battery-powered options, and drivers can choose to pay for their plates monthly or annually. Four-year agreements for battery-powered plates begin at $19.95 a month or $215.40 yearly. Commercial vehicles will pay $275.40 each year for wired plates. A two-year agreement for wired plates costs $24.95 per month. Drivers can choose to install their plates, but on its website, Reviver offers professional installation for $150.
A pilot digital plate program was launched in 2018, and according to the Los Angeles Times, there were 175,000 participants. The new bill ensures all 27 million California drivers can elect to get a digital plate of their own.
California is the third state after Arizona and Michigan to offer digital plates to all drivers, while Texas currently only provides the digital option for commercial vehicles. In July 2022, Deseret News reported that Colorado might also offer the option. They have several advantages over the classic metal plates as well—as the L.A. Times notes, digital plates will streamline registration renewals and reduce time spent at the DMV. They also have light and dark modes, according to Reviver’s website. Thanks to an accompanying app, they act as additional vehicle security, alerting drivers to unexpected vehicle movements and providing a method to report stolen vehicles.
As part of the new digital plate program, Reviver touts its products’ connectivity, stating that in addition to Bluetooth capabilities, digital plates have “national 5G network connectivity and stability.” But don’t worry—the same plates purportedly protect owner privacy with cloud support and encrypted software updates.
5 Reasons to avoid the digital license plate | Ride TechFrom Youtube
After the Rplate pilot program was announced four years ago, some raised questions about just how good an idea digital plates might be. Reviver and others who support switching to digital emphasize personalization, efficient DMV operations and connectivity. However, a 2018 post published by Sophos’s Naked Security blog pointed out that “the plates could be as susceptible to hacking as other wireless and IoT technologies,” noting that everyday “objects – things like kettles, TVs, and baby monitors – are getting connected to the internet with elementary security flaws still in place.”
To that end, a May 2018 syndicated New York Times news service article about digital plates quoted the Electronic Frontier Foundation (EFF), which warned that such a device could be a “‘honeypot of data,’ recording the drivers’ trips to the grocery store, or to a protest, or to an abortion clinic.”
For now, Rplates are another option in addition to old-fashioned metal, and many are likely to opt out due to cost alone. If you decide to go the digital route, however, it helps if you know what you could be getting yourself into.
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Steve Huff
Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
steve@dot.la
A Breakdown of the Data Snapchat Collects on Users
09:46 AM | November 14, 2022
Sebastian Miño-Bucheli
Santa Monica-based app developer Snap calls itself a camera company, but it’s really in the business of social media – and more specifically, advertising.
What Data Does Snapchat Collect?
Snapchat, their primary application, collects a myriad of data on its roughly 363 million daily active users, from basics like device information to detailed location tracking. "From day one, we’ve embraced data minimization, and believed that the best way to protect user privacy is to not store data at all, and if we do have to store it, to do so for a short and fixed period of time," Snap spokesman Pete Boogaard told dot.LA.
As such, like most tech companies’ privacy policies and terms of service, the verbiage is intentionally vague or full of legalese designed to make the user gloss over and click “agree.” But Snapchat does have to provide its users some details of how it collects, stores, and uses the data it gains from interacting with the app.
Bill Budington, a senior staff technologist at the Electronic Frontier Foundation, told dot.LA that the common phrase, “necessary to provide service,” is particularly concerning.
“These are very vague ways to basically give a green light to very permissive practices in terms of your data,” Budington explained. He pointed out the ambiguous nature of the word “necessary,” adding, “[tech companies] can deem all sorts of things necessary, [including] using your location at every moment to better tailor their services to your life.”
While Snapchat’s terms of service haven’t changed since last November, the company most recently updated its privacy policy on July 29. Let’s dive into the various types of data Snapchat collects, how it stores it (and for how long), and perhaps most importantly, how Snapchat says it’s used.
Why Does Snapchat Collect Your Location Data?
Snapchat is very invested in collecting users’ precise location data, if users allow it. Its Snap Maps feature launched in 2017 lets users opt-in to showing their Bitmoji avatar on a map corresponding to their location and also allows them to track other friends who have opted in. It’s not dissimilar to Apple’s FindMy app.
In the past, the feature has raised concerns for its ability to make it easier for bullies and stalkers to find targets. Snap Map location, however, isn’t public information. Snapchat says location on Snap Maps will disappear after 24 hours, or when a user deliberately goes into “ghost mode” to hide from friends – but that doesn’t mean the app still isn’t tracking their movements. The company noted that unless you opt-in to live location sharing, the Snap Map won’t update with your location when you’re not actively using it.
Boogaard told dot.LA that while many of Snapchat’s core features do require location tracking, “location-sharing is off by default for all users” and “Snapchatters have complete control over their location sharing.” Snapchat added that there is no option to share your location with any user you aren’t friends with and that users have to individually select friends to share their location with.
Snapchat clarified that it does use location data to provide its Geofilters – custom photo and video filters often themed around specific places or events – and show people what’s nearby (also useful for ad purposes).
“We don’t share personal data about the users of the Snapchat app with data analytics providers,” Boogaard said.
Snapchat employees can also allegedly access all this information, and more – in 2019 Motherboard reported on a tool called SnapLion that it claimed was abused by employees to “spy on users.” In response to the report, Boogaard told dot.LA, “Any perception that employees might be spying on our community is highly troubling, and wholly inaccurate." Boogaard added, "Protecting privacy is paramount at Snap. We keep very little user data, and we have robust policies and controls to limit internal access to the data we do have, including data within tools designed to support law enforcement. Unauthorized access of any kind is a clear violation of the company's standards of business conduct and, if detected, results in immediate termination."
How Does Snapchat Use Your Content?
Snapchat can see the snaps you send, who is receiving them, and how often you’re online, as well as the metadata in each image.
Snapchat’s Streak feature (which tracks how long you and friends have regularly been sending and opening each other’s content) is one reason why the app also collects data on how often you and your friends open messages or capture screenshots.
It also tracks and scans the content users upload to its Memories feature. This is to train its AI to recognize the content of user images. In its privacy policy Snapchat notes that “if there’s a dog in your photo, it may be searchable in Memories by the term ‘dog,’” as part of its goal to make image search more accessible.
Snap’s policy also dictates that any public content a user generates on Snapchat is also fair game for the company to share though it doesn’t say how it will share this content.
What Data Does Snapchat Collect From Accessing Your Camera?
Besides the typical use for taking pictures, Snapchat can also access information from Apple’s TrueDepth camera – the front-facing, high-powered cameras that Apple’s iPhone X uses to record Face ID and Memoji data.
Snapchat says it uses this data “to improve the quality of Lenses”—its filter and augmented reality feature. But it also said it doesn’t collect biometric information, much less store the data on its servers or give it to any third parties.
Still, that’s a practice that’s come under scrutiny recently. In August, Snap was sued, accused of violating Illinois’ Biometric Information Privacy Act by collecting and storing users’ biometric data without their consent. That $35 million case is expected to head to settlement next week, after a judge couldn’t rule in favor of either party. "Snap continues to vehemently deny that Lenses violate BIPA, which was designed to require notice and consent before collecting biometric information used to identify people," Boogaard told dot.LA.
How Does Snapchat Use Your Data?
Now that we know all the information Snapchat collects, what is the company doing with it?
The main use case is advertising. Snapchat has a myriad of advertisers on its platform and they are all eager to turn users into sales by showing them the most relevant ads. Ad pricing starts at a modest $5 per day, so theoretically anyone with a marketing budget and the right connections could use Snap’s tools to market to its growing audience of Gen Z and Millennials.
Snapchat promises advertisers “advanced targeting capabilities,” and the benefit of finding a target audience using its location, demographics, interest and device data.
But who’s getting this information? That’s where things get vague. Snapchat doesn’t have to tell users specifically which companies are getting access to their data. The company notes it may share information with service providers that it contracts for services like ad analytics or payments. The company also says it might share user information with “business partners that provide services and functionality” for Snapchat, but again, doesn’t elaborate any further.
Snapchat also says it will share information about users if it could help “detect and resolve any fraud or security concerns, comply with any investigations, legal processes or regulations and to investigate potential terms of service violations.”
Snapchat doesn’t have to tell users when it turns over this data, though. In fact, most apps don’t.
How Does Snapchat Store Your Data?
Snap’s Support site notes Snapchat servers are designed to delete all Snaps automatically after they’ve been viewed by every recipient; the app’s trademark fleeting quality. The servers will delete unopened Snaps between two people after 31 days, and unopened Snaps sent to a group chat after 7 days. Snaps sent to your story are wiped from the servers 24 hours after posting.
Snapchat also says that when you delete a Snap in chat, it deletes it from its servers and will “make our best attempt” to wipe it from your friends’ devices.
If you post a Snap to Memories, though, Snapchat’s servers will back them up forever – unless you delete them, in which case they’ll be erased ASAP.
So what’s the safest way to protect your personal information on Snapchat? Well, Budington recommends an easy fix: simply don’t use it. But for people who are determined to keep their account but want to access what Snapchat collects, there are ways to download your Snapchat data.
You can also opt-out of audience and activity-based ads and third-party ad networks. This will mean the ads on your Snapchat will be less relevant, but the trade-off is that the app will use less of your personal data for marketing purposes.Snap is an investor in dot.LA.
Correction: An earlier version of this article incorrectly described Snap Map's location tracking feature. The feature needs to be enabled first, and Snapchat offers the ability to turn off the feature in Map settings.
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Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
https://twitter.com/samsonamore
samsonamore@dot.la
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