A new revenue stream for CPG companies

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A new revenue stream for CPG companies

By Louisa Hallett - 07/19/2018
Cargo will provide Uber drivers with a box of snacks, drinks, electronics and beauty products for free.

Consumer packaged goods companies looking for new revenue streams could leverage a new opportunity created by Uber and Cargo.

Uber has teamed up with Cargo, a startup that provides ride-hail drivers with small vending machine boxes filled with stuff to sell to riders. Uber says the vending service will make the rides more convenient for passengers and give its drivers a way to find some extra money. 

"Drivers were already doing this naturally. … We've streamlined it," Jeff Cripe, Cargo CEO, said in an interview, referring to a common practice of offering water or gum to passengers. "It breaks down the invisible barrier between the front seat and back seat."

Cargo provides Uber drivers with a box of snacks, drinks, electronics and beauty products for free. The will contain approximately 10 products that consist of at least seven retail items, such as earbuds and morning recovery drinks. Passengers will be able to purchase these items through Cargo’s website on their smartphones. 

The deal comes shortly after employees of Uber started complaining about the longer working hours and the increasingly lower compensation they were receiving. In order to prevent further upset, the company has been increasingly added new features, such as in-app tipping, 24/7 phone support and easier passenger pickup systems. Partnering with Cargo is one way the company can help drivers earn a little more cash.

The driver gets a 25 percent commission of all sales, plus $1 for every transaction -- even one involving a free product. This generates an average of $100 per month per driver. Uber doesn't get a cut of these proceeds, however, the company is getting an undisclosed equity stake in Cargo as part of the partnership.

Uber has been scoring a plethora of partnerships within the last year, including retail stores such as Kroger and Venmo for increased business to consumer convenience. 

Cargo currently operates in nine cities, including New York, Baltimore and Atlanta. It is now expanding to San Francisco and Los Angeles and has approximately 7,000 active drivers. Uber currently operates in approximately 633 cities worldwide and counts 75 million monthly active riders and 3 million monthly active drivers across its global business.

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