Why On-Demand Shipping Service Shyp Is Turning Its Couriers Into Employees | Fast Compa... - 0 views
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Shyp involves multiple layers of complexity—once it picks up an item, it takes it to a warehouse, packs it up, then hands it off to a major courier such as UPS for delivery—but it's the couriers who define the face-to-face experience for customers. "Our service has so many touch points—showing up at your home and shipping anything anywhere in the world," says CEO and cofounder Kevin Gibbon. "It could be really expensive, like a painting or something like that. We felt that given how complicated the actual job is, the best course is to transition these folks."
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Still, by moving away from the contractor model, the company gains the ability to exert more control over the Shyp experience without fear of legal repercussions. It can get more involved in training and coaching couriers, managing the hours they work, and generally treating them like full-blown team members rather than freelancers. It will also begin to pay workers' compensation, unemployment, and Social Security taxes for couriers. They'll continue to use their own vehicles, but Shyp will cover costs such as fuel.
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Aren't employees more expensive than contractors? Sure, which is one big reason why on-demand startups have shied away from hiring them. But Gibbon says that Shyp's satellite drivers and warehouse workers are already employees, so hiring couriers isn't a dramatic departure. And its profit margins are such that there's room for the extra cost. "We felt that with everything we can bring operationally, it'll be a net positive," he told me. "If someone has a better experience, they're much more likely to tell someone else about it."
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"But that's about to change. Shyp is shifting from signing up couriers as contractors to hiring them as staffers, with the closer ties and legal obligations that such a relationship carries. The new approach will start in the next city Shyp enters: Chicago, where it plans to be up and running this summer. Couriers in the company's current markets-Los Angeles, Miami, New York City, and San Francisco-will transition from contractor status to employees on January 1, 2016."