Lyft expanding delivery services amid pandemic that has crushed ridesharing companies

The legal clash between California officials and Lyft, Uber: Could it shape the future of rideshare companies?

With the ongoing legal clash between California officials and rideshare leaders Uber and Lyft over the classification of their workers, many are left wondering whether these companies will reclassify their workers or leave the state. Will Swaim, the president of the California Policy Center, discusses the latest on what is happening with Uber and Lyft in California.

Lyft is hoping to expand its delivery services amid the coronavirus pandemic, which has weighed heavily on the bottom line of ridesharing companies.

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The company reported a year-over-year revenue decrease of 48% in the third quarter, as they brought in just $499.7 million, roughly half of their $955.6 million haul in the third quarter of 2019.

Lyft launched a pilot program called Essential Deliveries at the outset of the pandemic, which allows drivers to deliver food, goods, and anything else to businesses, non-profits and other organizations.

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"As we’ve expanded this program, we’ve spent time talking to retailers and other local businesses about what they need — and they’ve told us that current delivery models with their expensive commissions are not working for them," Lyft President John Zimmer said during an earnings call Tuesday.

"They’ve emphasized that the overall incentives are not aligned between delivery platforms and individual retailers. This creates a significant and differentiated white space opportunity to help retailers and local businesses fulfill their organically obtained traffic."

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Uber is also bleeding cash with an 18% third-quarter decline in revenue year-over-year, but its food-delivery service, Uber Eats, has cushioned the fall. Net revenue for Uber Eats grew 190% year-over-year in the third quarter.

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Uber Eats charges a 30% commission on deliveries and a 15% commission on pick-up orders. Lyft is hoping to create a service that charges more competitive rates.

"These businesses want a partner – someone to help them move their goods from point A to point B, but one that does not step in between them and their customers," Zimmer said Tuesday.

"This delivery model plays to our strengths, including making full use of our existing technology. It is very early days, but we look forward to updating you on our progress as we continue exploring this path."

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A Lyft spokesperson told FOX Business that the company envisions becoming a "back-end partner to retailers/restaurants" as opposed to consumer-facing platforms like Uber Eats or DoorDash.

Shares of Lyft held steady Tuesday but are down 17% on the year.

Uber, Lyft, and other ridesharing companies scored a massive win last week when Californians voted to allow them to classify drivers as independent contractors instead of full-on employees with benefits.

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