This startup wants to turn your car into a vending machine
Posted May 31, 2018 6:19 a.m. EDT
HONG KONG (CNNMoney) — Forget your sunscreen on the way to the beach? Your Uber ride could save you a trip to the drugstore.
Cargo, a New York-based company founded in 2016, equips ride-hailing drivers with boxes of snacks, drinks and beauty products to offer to passengers.
On Monday, it announced a partnership with Grab, southeast Asia's biggest ride-hailing firm, to roll out the service in Singapore. Grab made headlines in March when it bought Uber's business in the region.
About 1,000 Grab drivers in Singapore will receive Cargo's boxes starting this week, a service the companies say will eventually expand to other countries in the region.
"All of us spend so much time in ride-share vehicles that it felt like there should be a way to innovate on that experience," Cargo CEO Jeff Cripe told CNNMoney.
For passengers, using the service is pretty simple: they'll be able to order products on their phones and add the cost to their fares.
For drivers, it's a chance to earn more cash on the road. Those offering the "Grab&Go" service could improve their passenger satisfaction ratings and earn as much as an extra $190 each month, according to the companies.
They'll make money each time a passenger buys an item or takes a free sample from the Cargo box.
"They take no financial risk upfront," Cripe said. "All that inventory is provided for free."
Like other ride-hailing companies, Grab is looking for new ways to make money from its tens of millions of customers. The company recently expanded into food delivery and digital payments, encouraging people to use its platform to transfer money to friends and make purchases at restaurants and stores.
Cargo's partnership with Grab is its first direct arrangement with a ride-hailing firm, though it says it already works independently with thousands of Uber and Lyft drivers in the United States. Uber and Lyft did not respond to requests for comment.
Coca-Cola and Kellogg are among the retail partners signed up in the United States by Cargo, which says it makes money from distribution deals that can be worth millions of dollars.
Cargo's approach offers a new distribution channel for retail brands, said Sucharita Kodali, an e-commerce and retail analyst at research firm Forrester.
"The idea is that if people aren't going to the store, bring the store to them," she told CNNMoney.
But it could be difficult for startups like Cargo to build a business of significant scale, Kodali added.
"You need an awful lot of cars to get any decent distribution. A single Uber or Lyft driver isn't going to touch that many people in a day," she said. "Each car would generate less than a single vending machine."
Cargo says it aims to reach 25 million passengers in 20,000 vehicles by the end of the year.
Drivers are already using Cargo's platform in seven US cities, including New York and Chicago. And it says it has plenty of interest from areas where it doesn't operate yet. A big part of the challenge "is just expanding and actually activating drivers," Cripe said.
But while the extra money could make a difference for drivers, the revenue from the business is unlikely to be "game-changing" for major ride-hailing firms, Kodali said.
And if it does turn out to be more lucrative than expected, Uber and others could just set up their own platforms and cut Cargo out, she added.