With demand in the ridesharing industry getting broadly crushed due to lockdowns and other coronavirus containment efforts, Lyft (LYFT 1.67%) has at long last decided that it's time to expand beyond that core offering. The company yesterday announced a new service called Essential Deliveries, which is pretty much exactly what it sounds like. As part of a new pilot program, the company will tap its army of drivers to help deliver essentials like meals, groceries, medical supplies, and other staples like hygiene products or other basic necessities.
Larger rival Uber (UBER 1.24%) has long offered services outside of just ridesharing; it's about time Lyft did likewise.
The coronavirus has destroyed demand for ridesharing. Image source: Lyft.
Giving drivers more work
Initially, the program will only offer delivery of essential items to certain organizations like government agencies, local nonprofits, and healthcare providers. Early partners include Dole Packaged Foods, which is working to have food delivered to senior facilities; and Army of Angels, which is trying to get school lunches delivered to low-income families. Lyft says it plans to develop more partnerships to expand the program's availability around the country.
This isn't a consumer-oriented service like getting food delivered to your house from a local restaurant (at least not yet). Those types of services require more back-end integration and development, which would take longer, but Lyft could potentially be exploring that avenue as well. Besides, major food delivery platforms including Uber Eats are now getting hit with an antitrust lawsuit.
Both of the dominant ride-hailing tech platforms -- namely, Lyft and Uber -- have seen revenue plunge by around half, according to The Information. Much like other workers within the service industry, contract drivers' ability to make ends meet has been annihilated by the COVID-19 pandemic, and Lyft is framing Essential Deliveries as a way for drivers in select markets to get more work.
"As communities shelter in place, the need for items to be delivered to the doorstep is at an all-time high," Lyft's director of social impact, Lisa Boyd, said in a statement. "Whether it's meals for high-risk seniors or medical supplies for individuals with a medical condition, Lyft's community of drivers is ready to help meet the needs of our communities while earning additional income."
The news comes after Lyft last month tried to gauge interest among drivers to join LyftUp, a broader effort to meet transportation needs around essential supplies.
Diversifying the business
Uber first expanded into food delivery back in 2014 with UberFRESH, which was subsequently rebranded as Uber Eats year later. Lyft has long resisted calls to follow suit -- until now.
The larger ridesharing company had hosted a call last month to reassure investors that it had enough financial fortitude to "weather this crisis," and RBC Capital Markets analyst Mark Mahaney asked whether Uber had considered other services where "a series of consumer staples and medical supplies are actually delivered to" vulnerable consumers like senior citizens.
CEO Dara Khosrowshahi was very receptive to alternative models, and Lyft appears to be finally appreciating the benefits of a diversified business.
