Merchant Innovation

Another On-Demand Delivery Service Shifts Gears

Favor Pulls Back

Since Amazon made on-demand delivery the feature of choice for any retailer capable of delivering it, plenty of merchants who had no business doing so had no choice but to stomach the costs and ship like they've never shipped before. An entire cottage industry of turnkey on-demand logistics providers sprung up as a result, though recent news proves that it's far from a settled market.

TechCrunch is reporting that Favor, an Austin, Texas-based delivery startup launched in 2013, is amending its coverage areas to include five fewer cities than the 23 it previously supported. Effective Friday (June 17), Favor has officially pulled out of Chicago, Philadelphia, Atlanta, Miami and Washington, D.C. — all so-called tier-1 cities that Favor CEO Jag Bath said weren't as suited to the company's business model as the smaller cities it now evidently prefers.

“We believe tier-2 and tier-3 cities are an overlooked opportunity,” Bath told TechCrunch. “The needs of these cities are no different than tier-1 cities — consumers want convenience, and runners and delivery drivers want to make money in those cities — and it’s a large opportunity.”

Favor continues to operate in 18 cities, and according to Bath, the ratings for Favor's service in those areas consistently reached the five-star mark. That's not to say that Favor is content to remain a company with limited geographical reach, as its remaining operating territories include a cross-border dalliance in Toronto.

"Scaling a logistics company requires great attention to detail, and closing operations in these markets is a healthy thing for our business, as perfecting our service and delivering it at scale has always been our number one priority," Bath said in a statement.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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