• Ultimate Gig

Key Developments Across the Gig Economy

Updated: Feb 3, 2020

Gig Companies Take Their Case to Voters

Much of the nation’s attention continues to be focused on California, and not just because of the tragic fires raging through portions of the state. On October 29, Uber, Lyft and other gig economy companies announced they submitted a ballot initiative to undo the effects of AB 5, a statewide law intending to reclassify many contract workers as full-time employees. In its quarterly earnings report Nov. 4, Uber said AB 5 could affect 9% of its gross bookings for both its Rides and Eats business lines.

Opinion pieces discussing the new law and its likely impact continue to pour in, including this provocative headline by a Forbes contributor: California Destroys $1 Trillion Gig Economy With New Law. Watch for possible action in New York and other states.

Mixed View on Wall Street

While the number of gig economy companies continues to grow, some of the biggest names continue to wrestle with how to turn their popularity into profits. Both Uber and Lyft reported continued losses for the third quarter, though with differing Wall Street reactions.

Uber’s $3.8 billion in revenue beat analysts’ expectations, but its $1.1 billion loss pushed the share price down. Shares dropped further with the Nov. 6 expiration of its post-IPO lockup, which frees early investors and employees to sell shares. Lyft also is still losing money, but less than analysts expected, and revenue per rider is on the increase, so it saw its shares rise on the news.

Meanwhile, Etsy, which is profitable and met analyst expectations, was rewarded with a decline in share price as its profits decreased. Etsy’s free shipping program is particularly interesting to watch.

Gigs Transform Marketing

Those working in marketing and sales must prepare for their professions to be transformed by the gig economy, says Dr. Greg Marshall, the Charles Harwood Professor of Marketing and Strategy at Rollins College’s Crummier Graduate School of Business. Dr. Marshall, who is a co-author of the Ultimate Gig project, shared his views on the gig economy in a Crummier publication and discussed the upcoming Ultimate Gig book.

The Trouble With Food Delivery

California AB 5 isn’t the only pressure on food delivery gigs. 

GrubHub announced disappointing quarterly results on Oct. 29, sending the company’s stock to its lowest level in two years. Bloomberg columnist Connor Seth posits that these results are indications that the low-margin food delivery business as a whole is under pressure and that if GrubHub and other food delivery companies cut back as a result, that will, in turn, have negative implications for the restaurant industry, where so-called “off-premise” sales now represent significant revenue.

Families Turn to Gigs in a Pinch

While California attempts to shift the gig economy landscape, JP Morgan Chase released a new report describing how families, and especially men, use what the financial institution describes as the “online platform economy” to bridge income gaps. The analysis spanned 39 million Chase checking accounts and tracked payments through 128 online platforms between October 2012 and March 2018.

Post-AdvoCare Moves

The direct selling community’s attention continues to be primarily inward, with companies attempting to process the broader implications of the FTC’s recent actions against AdvoCare and Neora. On Nov. 1, the same day it was hit with an FTC lawsuit accusing it of operating a pyramid scheme, Neora turned the tables, filing a lawsuit against the agency. Neora alleges the FTC has been illegally changing the rules governing direct selling companies and essentially retroactively making any company with a multi-level compensation plan a pyramid scheme.

You’ll find a link to the court filing within the press release. Both are worth reading.

Meanwhile, Modere is among direct sellers distancing itself from old labels, issuing a press release Nov. 1 describing its distribution model as “social retailing” and its distributors as “Social Marketers.” Modere CEO Asma Ishaq says: “Our social commerce business model is designed to provide an independent salesforce a business platform that they can use to socially build a customer base to whom they provide effective, scientifically-substantiated products. It’s also an innovative way to help people earn supplemental income without recruiting practices.”

In Other News ...

Several other companies issued quarterly earnings results, including: UpworkExpedia (HomeAway) TupperwareHerbalife (which also announced a new CEO) AvonLifeVantageNuSkin

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