Grocery delivery startup Dumpling is taking on Instacart and Shipt — and the whole gig economy — by offering grocery delivery drivers an entirely new moneymaking model.
Thanks to a surge in demand as a result of the pandemic, grocery delivery apps are more popular than ever. Since last March, Instacart and Shipt have hired more than half a million gig workers to shop and deliver food to customers who’d rather stay at home and order online.
Those hordes of gig workers, who are independent contractors, rely on grocery delivery to supplement their earnings or make up their income entirely. While this arrangement is a welcome and fast form of cash for some folks, others are finding that the income from Instacart and Shipt is unsustainable.
That’s where Dumpling comes in: capitalizing on the growing trend of grocery delivery as well as the rising concerns of delivery workers who want more control over their income by allowing them to choose who to work with and how much to charge.
Here’s a look at one of the newest grocery delivery apps on the block, and how you could use it to launch your own grocery delivery business.
What Is Dumpling?
Dumpling is a grocery delivery service founded in 2017 by Tom Schoelhammer, Nate D’Anna and Joel Shapiro, who all left corporate tech jobs to try their hands as entrepreneurs.
On the customer side, Dumpling operates much like other grocery shopping apps: You download the app, select a nearby grocery store, choose what items you want to buy, place your order and voila, a nearby personal shopper will deliver the items to your doorstep.
Where Dumpling differentiates itself is in how it’s used by delivery workers. It is essentially a suite of software and coaching services for those looking to launch their own small grocery-delivery business.
As a shopper for Dumpling, you’re considered a small business owner, not a gig worker.
According to the company, more than 2,000 small business owners from all 50 states use Dumpling to deliver groceries locally.
Dumpling markets itself aggressively as a “personal, ethical and local” alternative to Instacart and Shipt, which rely on an army of gig workers to do the shopping.
Since its launch and especially during the pandemic, Dumpling and its co-founders have become increasingly outspoken about the downsides of the gig economy.
“What can we do to help more people gain greater control, autonomy, and flexibility over the way they work?” Dumpling’s website states. “When we set out to find an answer, we didn’t know we’d eventually be taking on the gig economy.”
But does the company provide a meaningful alternative?
How It Works for Dumpling Shoppers (aka Business Owners)
As a grocery shopper for Dumpling, you’ll have more autonomy than with typical gig apps.
In a training video for new Dumpling shoppers, Bree Crawford, director of coaching at Dumpling, contrasts the company with other shopping gigs.
“As a prior Instacart shopper, I have a pretty good idea of some of the questions you’re going to run into,” she said. “With Instacart, we’re used to just sitting around waiting for batches, and it’s just stupid.”
With Dumpling, you can choose who you want to deliver to, set how much you want to charge per delivery, select the stores where you want to shop, schedule deliveries in advance and more.
But that autonomy comes at a cost.
Dumpling Shopper Fees
To start your shopping business, you need to pay a one-time fee, currently $19.99, for an activation kit. The activation kit includes:
- A Dumpling business credit card that you’ll use for your orders.
- Access to a personal shopper website hosted by Dumpling.
- 100 business cards.
- Access to the “Boss” version of the Dumpling app, which you’ll need to connect with clients.
“The Dumpling credit card works as a micro loan to business owners. When the client places an order, the credit card is funded for the business owner to shop and pay for the order,” Shapiro told The Penny Hoarder. “This system allows Dumpling business owners to shop all orders without fronting any funds themselves.”
The company also offers Pro and Tycoon monthly membership plans for business owners, which give you access to better credit-card and business-profile perks. Pro costs $49 per month, and Tycoon costs $99 per month. A standard plan is free.
You can expect the activation process to take about a week.
In addition to the activation fees, you pay two fees per grocery order: a credit card processing fee and a “platform” fee. The credit card fees are tiered based on your membership category.
Under the standard plan, you pay 3.9% of the order total, including gratuity, plus 30 cents. If you’re Pro, you pay 3.2% plus 30 cents. Tycoons pay 2.8% plus 30 cents. The platform fee is a flat 5% of the cost of groceries sans delivery and gratuity for all membership levels.
For example, if you have a $100 grocery order, plus your delivery charge of $10 (which you can customize) and a $20 tip, here’s how your earnings would break down under the free standard plan.
- Gross order earnings: $30 ($10 order charge plus $20 tip).
- Credit card processing fee: $5.26 (3.9% of $135 plus 30 cents).
- Platform fee: $5.00 (5% of $100 worth of groceries).
- Net order earnings: $19.74.
According to Shapiro, the average earnings per order are $40, “which is significantly higher than traditional gig work platforms for grocery delivery.”
Previously, you could set a fixed minimum gratuity percentage up front for every order, but Dumpling recently removed that feature, according to app store reviews.
To prevent tip baiting, a practice where some Instacart customers lure shoppers in with big tips up front only to zero them out after the order, Dumpling does not allow your customers to reduce their tips after the delivery. They can only increase it.
The trick is to find the right delivery charge. Too high, and you risk driving your customers to Instacart, Shipt or another Dumpling deliverer. Too low, and those fees eat away at your tip.
Once you set up your Dumpling account and receive your activation kit, you’re eligible for free coaching. The initial coaching session is a basic onboarding call in which a Dumpling coach will show you the ropes.
After that, you can receive additional coaching free of charge. The program includes three calls with one of Dumpling’s staff coaches, “all of whom have backgrounds in grocery delivery gig work and run successful businesses on Dumpling themselves,” Shapiro said.
The coaching program can start at any time so long as your account is active, with each session spaced out “a few weeks apart.”
Coaches can help you with a range of things like utilizing your business website, app functionality and marketing tips. Between sessions, coaches can help with smaller questions, too.
After the three coaching sessions, you may be able to get more assistance if needed.
“Dumpling business owners never have to pay money to access this program,” Shapiro said. “However the coaches do ask for their undivided attention and that they continue putting in the effort on their own business to remain in the program.”
Finding Your Own Customers
Perhaps the most notable difference between Dumpling and other grocery shopping gig apps is that, as a business owner, you’re responsible for finding your own customers.
There are several ways to connect with them, and Dumpling does assist you with this, but the process is not automatic.
For example, with Shipt or Instacart, you log on and wait for an order to pop up on your app. Then you can choose to accept or decline, knowing little to nothing about the customer. Or it’s possible that an order will be claimed by competing shoppers in your area before you have a chance to act.
At Dumpling, you’ll need to interact much more with customers — with the ultimate goal of scheduling them on a recurring basis. And the initial order could take some leg work.
Since Dumpling is a relatively new company with fewer customers than competitor grocery delivery apps, you may find yourself giving a sales pitch: first to explain what Dumpling is, and second, to convince the customer to schedule you for grocery orders through the app.
Customers may also find you through a ZIP code search function on the Dumpling website and app or directly from your personal Dumpling business site. But that’s assuming that one of your neighbors is already familiar with the company.
Dumpling is not for every gig worker. It takes a certain amount of risk tolerance. Given the activation and processing fees, there is a chance you could go in the red on some orders, and there’s no guarantee that you’ll get any orders in the first place.
What Dumpling does offer you is more autonomy and control over your grocery-delivery enterprise — something many gig workers, whose earnings are based on ever-changing algorithms, are craving.
Adam Hardy is a former staff writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.