Gig Economy to Hosts Drivers Companies

On Wednesday, December 9, 2020, a bike messenger in New York City is carrying a DoorDash bag while making a delivery.

Chesky told CNBC’s “Mad Money” in April that Airbnb could “take marketing down to zero and still have 95 percent of the same traffic as the year before,” implying that there would be no return to pre-Covid spending for the home-sharing site.

Airbnb’s second-quarter earnings report on Thursday revealed that sales and marketing expenses rose 175 percent year over year to $315.3 million, far from bringing the total to zero. In the fourth quarter of 2019, costs reached a high of $437 million.

Instead of focusing on luring travelers, Airbnb is now actively courting hosts. In the gig economy, it’s becoming more and more common. On Thursday, DoorDash, a food delivery service, announced that it had increased its sales and marketing costs by over 150 percent from a year earlier in order to attract “Dashers,” as the company’s drivers are known as Slot Online.

Blind Spot Mirrors
Blind Spot Mirrors

To put it another way: The pandemic and an increasing number of app-based share-everything companies are driving up freelance and contract work prices in the United States. Supply-end bolstering is critical for platforms to meet consumer demand and keep growing at a rapid pace.

As expected, the revenue of $1.24 billion beat expectations, but DoorDash’s quarterly loss of 30 cents per share was larger than the 6 cents analysts expected. Before the markets opened on Friday, the stock had fallen by more than 4%.

Uber Eats and GrubHub are challenging DoorDash in the food delivery market. In a broader sense, Instacart, relies on drivers to deliver groceries, Uber and Lyft provide transportation services, and Amazon Flex delivers packages and groceries.

Long wait times and customer complaints about higher prices have plagued Uber and Lyft recently. It was revealed last week by Uber CEO Dara Khosrowshahi during the company’s earnings call that Uber is spending more on recruiting drivers.

It was in Q2 that the company spent most on driver acquisition and incentive programs, Khosrowshahi said. In order to reduce wait times and surge levels, “we really had to act very quickly because the market was not at a place that we considered healthy.”

In the case of Airbnb, things are quite a bit different.

Between the third quarter of 2019 and the third quarter of 2020, the company slashed its marketing costs by about 75 percent because of the pandemic.

As vaccines became available and the economy began to pick up, business at Airbnb recovered. Instead of relying on digital and TV advertising to find new customers, the company turned to the opposite end of its market.

Co-founder of Airbnb Brian Chesky said the company needs to hire millions more hosts to keep up with the growing demand. A new ad campaign from Airbnb features photos taken by guests who have stayed in host homes all over the world.

The campaign was expanded to Italy and Spain in the second quarter, according to Airbnb’s earnings statement. Sales and marketing costs for the quarter totaled $292 million, the highest since the first quarter of 2020 when the company spent about $311 million. Excluding stock-based compensation.

We continue to be very pleased with the results of this campaign in terms of traffic, first-time customers, interest in hosting, and brand favorability,” Chesky said during a conference call with investors.

If recent pandemic trends continue, Airbnb’s investment in recruiting hosts could backfire.

A highly contagious strain of Covid-19 known as the delta variant, which is causing a spike in hospitalizations in Florida, Texas, and elsewhere, is expected to affect travel behavior “including how often and when guests book and cancel,” Airbnb wrote in a letter to shareholders.

Uber and Lyft face similar risks in their core businesses. Despite the pandemic’s impact, DoorDash was a big winner.

When a restaurant reopens, what happens to DoorDash’s customers? Between the middle of February and the middle of May, the stock’s value was halved. However, it has recouped more than half of its losses due to the worsening news surrounding the delta variant.

Analysts are keeping a close eye on the Hushhostelistanbul gyrations. Alexander Potter, an analyst at Piper Sandler, wrote in a note following the company’s earnings report that DoorDash’s future demand remains uncertain.

According to Potter, who has the equivalent of a “hold” rating on the stock, “We still believe there is a risk of normalization in coming quarters.” The problem could be delayed, however, by a resurgence of Covid.