Last month, when Intel released its report detailing the emerging “passenger economy,” it estimated that the value of the associated goods and services would be a stunning $7 trillion by 2050.
Intel defines the passenger economy as what will happen when self-driving vehicles and ridesharing services turn drivers into idle passengers. A captive audience with lots of downtime is a marketer’s dream, and one Techstars Mobility alum called Cargo Systems, which just exited stealth mode, has figured out a way to turn rideshare vehicles into mobile convenience stores.
The company is based in New York City and was founded last year by two former Birchbox employees. The service, open to any rideshare driver who qualifies, allows passengers to use their phones to order simple sundries like a phone charger, pack of gum, or bottle of water. Drivers get a text alert after the order is placed that tells them which products have been purchased, which they then hand to the passenger. Passengers can pay via PayPal, Android Pay, Apple Pay, or by scanning their credit card.
Cargo sends an onboarding kit at no cost to participating drivers, which comes pre-packed with inventory and replenishments. An accompanying display box set up in the car (see photo) holds the items for sale and also has USB ports for charging. Drivers make 50 cents from each item sold, and if they get a tip from the passenger as part of the sale, it’s theirs to keep.
“The concept is fairly easy,” says CEO Jeff Cripe. “How we power it is what’s cool.”
The Cargo display box has a URL and code printed on it. Passengers go to the URL and enter in the code, which takes them directly to a menu with the driver’s inventory. As the products are distributed, Cargo tracks orders in real time. If an item is an especially hot seller while others just seem to languish, the system will automatically adjust for that on the next shipment, which is sent directly to the driver.
“We have complete visibility into inventory and how quickly products are selling,” he explains. “There’s no merchandising decisions or re-ordering. It’s kind of a business in a box. We want drivers to be drivers, not cashiers.”
The company makes its money by reselling products from wholesale distributors, and brands also pay Cargo to distribute free samples. (Cripe says at any given time, 30 to 50 percent of the items in a Cargo box are free, but the drivers are paid the same per-item fee regardless.) It also gives drivers cash bonuses if they meet sales goals. “We do a lot of direct-to-driver marketing,” he adds.
Cripe says Cargo’s biggest markets so far are New York, Boston, Chicago, and Detroit, with sign-ups in 49 states and 10 countries. Because the company is one of the few with access to Uber’s Driver API, it gives “preferred access” to Uber drivers who sign up. (A driver activation event is planned in Detroit this fall, he says.)
Cripe says the Motor City is quickly becoming one of Cargo’s most important markets and fondly recalls the experience of participating in the Techstars Mobility incubator last summer.
“We came in to Detroit from New York as a half-retail, half-mobility company, so we knew we needed to be in the Mecca of automotive and mobility,” Cripe says. “We got to hang with car companies and thought leaders, we got connected to rideshare companies, and we piloted our system with Lyft. It was an awesome experience.”
The feeling must have been mutual, because Techstars Ventures added to its original investment as part of a $1.75 million seed round Cargo raised last November. Rosecliff Ventures led the round, with participation from Detroit-based Fontinalis Partners and Detroit Venture Partners.
Cripe is bullish on the future of mobility even without Intel’s jaw-dropping revenue projections. “The industry is growing like crazy,” he says. “There are 15 million rideshare rides every day across the world. It’s expected to be a $285 billion industry by 2030 with more than 100 million rides per day. That’s a massive mobile marketplace.”
Cargo’s vision, Cripe says, is tied to how to improve the in-car experience. He’s seen competitors provide riders infotainment or “small-scale access” to retail products, he says, but not the comprehensive system his company is offering.
“I haven’t seen a full-scale retail operation like ours to reconcile and track inventory across thousands of mobile storefronts,” he says.
Cargo plans to start recruiting drivers in “less obvious” markets such as smaller college towns later this year, and will go after another round of funding in the fall. “We’ve demonstrated that the system is scalable and it works, so we’re focused on expanding.”
