May 15, 2015

Are Uber-Risks Worth Partnering With the Sharing Economy?

Connect the dots between one report (about consumer preferences) and another trend (about retailers partnering with sharing economy companies), and you apparently have a trend that should get brand vice presidents’ concerned.

That’s the argument being made by Steven Kramer, CEO of employee relationship management platform WorkJam.

Trusted Partners

Now let’s retrace our steps and look at the dots.

First is a report from e-commerce and digital marketing Accenture subsidiary Acuity Group that suggested that 52 percent of consumers say that, when they have problems with a product deliver, they are likely to blame the brand the product is ordered from — not the company delivering the goods.

The impact? When an order arrives late at their door, nearly two-thirds (63 percent) of respondents said that would influence their future shopping decisions.

Add to that the trend that retailers and many other traditional firms are looking to partner with sharing economy upstarts like Uber, InstaCart and TaskRabbit.

Recently, Uber and Hilton announced a partnership.

Uber has made it known its intent to become a delivery service on top of a car-sharing superstar.

Instacart has partnerships with Whole Foods, Natural Grocers and W-E-B Partners[sic], among others.

“Companies are partnering with these third-party sharing economy services because they provide a quick fix to accessing a flexible labor supply for their e-commerce businesses,” Kramer said.

Even Half Is Too Much

Sure, that all makes sense — as well as traditional companies hopes that some sharing economy hype might rub off on them — but where they had me was at 52 percent. Is that really even a number to be bothered about?

“In our opinion, 52 percent is quite a high number and at these levels, any service problems can be very damaging to a brand. When a retailer spends an enormous amount of resources building their brand, it can be very detrimental to the business if a partner delivers poor service in their name,” Kramer said.

We could think this is a cynical PR ploy by Kramer — one of his long-term solutions for these brand-conscious companies is to instead invest in “improved labor scheduling technologies” so that companies can maintain control over their operations and not cede risk control and brand power to third parties, and Kramer’s firm sells these labor scheduling technologies.

High Risk Area

But others agree with his point that these partnerships should be entered into at a gingerly pace.

“The risks are quite high. For all the positives about tapping into an immediate workforce, the retailer also assumes risks associated with the workforce sharing startup,” said Rebecca Brooks, a marketing analyst with 20 years’ experience and  co-founder and partner of Alter Agents, a qualitative and quantitative research firm.

Those risks include brand-damaging reputational risks. Take an Uber. Next time it’s caught spying on its riders or accused of something worse, the fallout could irradiate corporate partners as well.

Like working with any third party, companies considering these partnerships ought to do their due diligence.

“It is an easy bandwagon to jump on, but a smart retailer will look before they leap,” said Brooks.

What to Do

Ask questions like:

“How are they scaling their business? What issues or challenges are they facing? How confident are you in their leadership? Do you have confidence that this brand will still exist and/or be relevant in the coming years?” Brooks said.

And retailers and other companies should measure their customers’ sentiments as these partnerships unfold, added Kramer. Evaluate customer satisfaction levels not just to continuously measure the impact of outsourcing certain services, but to demonstrate to customers that you care.

And to see if that 52 percent really is a big deal to you.

Matthew Brodsky / CMSwire

Recent Posts

Nov 08,2023

WorkJam and Quay Consulting Partner for System Implementation in APAC

Customers will benefit from increased support to streamline deployment and strategy around WorkJam’s implementation to further boost organisational performance and productivity.

Oct 17,2023

WorkJam Expands Partnership with Blue Yonder to Fully Orchestrate Frontline Workforces with Task Management and Communications Tools

This expanded partnership will seamlessly bring together the best of Blue Yonder’s Workforce Management (WFM) solution and WorkJam’s digital frontline workplace to unlock incredible value for joint customers.