The on-demand grocery delivery service Dumpling, which advertises itself as an “ethical” alternative to Instacart, had a lot going for it this summer: a rapidly growing base of loyal couriers; a worker-controlled pay model; glowing press coverage at a time when other gig economy companies faced worker-led strikes and protests against exploitative tipping policies and poverty wages.
“We’re the personal and ethical alternative to big name grocery delivery services,” Dumpling posted on Facebook in May as part of a public relations push to attract new customers and workers during the grocery delivery boom triggered by the COVID-19 pandemic.
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“Dumpling is already successfully flipping the gig model on its head in the grocery world,” a public relations email from Dumpling sent to me in September said. “More than 2,000 grocery shoppers…control their pricing, tips, schedules and clients—and most now earn more than 3X that of their Instacart counterparts.”
But Dumpling is now in hot water with many of the gig workers on its platform, which it calls “business owners.” These business owners say the company has misled them about how much autonomy and control they’d have on the platform, and has shut down their Facebook group after workers on the platform spoke out against a series of changes the company made to its pay model in the latter half of 2020. When Dumpling closed the Facebook group, it said the group “ha[d]n’t lived up to its positive intent.”
“If someone didn’t like the new changes and spoke out in the Facebook group, their comments would be muted, not approved or they would be kicked out of the group,” said Jacqueline Cruz Hardoy, a Dumpling business owner in Chicago. “I had my own comments and questions about the new pay model deleted.”
The backlash against Dumpling shows that even gig economy companies that seemingly launched with good intentions run into challenges when they start to scale up and accept funds from venture capitalists, both of which, generally speaking, create pressure to make changes that increase revenue and lower the cost of labor. In July, around the same time Dumpling added new charges for business owners, it announced that it had raised $6.5 million in venture capital.
Unlike Instacart and other gig economy apps, which use opaque black box algorithms to determine pay and control the relationship between workers and clients, the Dumpling model is transparent and simple. Business owners shop at whatever stores they want, set their own rates, and build relationships with customers who can book them specifically. Business owners pay $5 per transaction or a monthly fee to put their profiles in the Dumpling database for customers to find and for pre-loaded credit cards that cover the cost of groceries.
But Dumpling has been introducing changes to the app, many of which coincided with the venture capital investment. As reported by OneZero in July, some of these changes reduced small business owners’ autonomy, which had been the app’s selling point. The app announced new monthly plans that charged business owners credit card processing fees of up to 3.9 percent per order, and higher fees for monthly subscriptions to its services. The standard “pro” plan that most business owners use now costs $49 a month, which is up from $39 a month. The price increases also came with improvements and protections for delivery workers—they now include fraud protections against customers who don’t pay and “price adjustments” for driving extra distance, among several other things.
But the greatest pushback came in November when Dumpling removed a popular feature which allowed business owners to set their own tipping minimums. Under the new model, customers can tip nothing, which puts business owners in danger of negative earnings on an order depending on their settings. Many workers are also worried about “tip-baiting,” a practice common on Instacart, where customers lure workers into accepting an order with a high tip only to lower or remove it later. Tip-baiting is not possible on Dumpling, but many workers have been previously burnt by this practice.
Cruz Hardoy, the Dumpling business owner in Chicago who began delivering groceries during the pandemic when catering jobs dried up, says she initially signed up for the app in October after seeing an ad on Facebook that marketed it as an ethical alternative to Instacart.
“I heard horror stories about the tip-baiting on Instacart during the pandemic, and I knew I didn’t want to work for them,” she told Motherboard. “I wanted to do my own thing and Dumpling advertised itself that way and had low start-up costs, so that’s why I chose them.”
But roughly two weeks after she joined the app, Dumpling announced the new changes.
“None of these were mentioned in the steps I took to work with Dumpling. But when I brought this up in the Facebook group, I had my comments deleted,” she said. “Lots of people have been leaving the platform since then and conducting their own business on Square.”
Another Dumpling business owner in Georgia who asked to remain anonymous because they feared retaliation from the company told Motherboard that she switched from Shipt to Dumpling this fall also because of the promise of greater control over her earnings.
“I thought I’d have more control over my pay because of the tipping minimum option,” she said. “I knew I could charge a 15 percent tip and that would cover my costs and allow me to be in solid control of how much I earn, but they took that away.”
“The whole premise of their website is that you can take control of what you make. It felt like it was a bait and switch,” she continued. “I didn’t want to serve people who weren’t going to tip me for what I provide, which is a luxury, concierge service, but that’s where I’m at now.”
The business owner says she’d like to leave the platform entirely because of the changes, but can’t do so without risking losing many of her most loyal customers who recently switched from Shipt to Dumpling to retain her services.
Facing backlash, Dumpling reversed some of these new policies, and allowed veteran business owners to stay on their old plans, and suggested workers raise fees to make up for gratuity.
Joel Shapiro, Dumpling’s CEO, told Motherboard that the new tipping policy is “100 percent about breaking down barriers to organic new client acquisition to support Business Owners in growing their customer bases.”
“Dumpling was…founded on the voices of former gig workers, so when there was feedback on nuts and bolts of the update, the Dumpling team took that to heart and made key adjustments,” he continued.
Shapiro says he believes the changes have been good for business owners. Earnings, he said, have increased from an average of $33 to $40 an order since the company removed the mandatory tipping option and added new processing fees, and that the number of orders per business order across the platform have increased by 15 percent.
“The Dumpling team has invested heavily and worked tirelessly in the face of the pandemic to ensure we successfully support the growing corps of gig workers seeking a better option for themselves,” Shapiro said.
But Motherboard reviewed screenshots of invoices from business owners since Dumpling changed pricing that show low earnings, at least on some orders. One invoice from a Wegman’s on a $116.70 order shows a worker earning just $3.00 after accounting for the new processing fee but not accounting for tips. Another invoice from Target on a $155.99 order shows a worker earning negative $6.83, after platform and processing fee deductions.
Business owners have the option of charging their customers flat fees or a percentage of the cost of their order to earn money, but a lot of workers keep these charges low in order to retain and attract customers, and have relied on tips as a primary source of income.
Dumpling says that instead of banking on tips, workers should use the percentage pricing model to reach their desired earnings. “For business owners who previously used a required minimum tip to ensure desired earnings, they can now use the Percentage pricing model to accomplish the same thing, where business owners set the percentage and the minimum fees,” Shapiro said.
Matthew Telles, a Dumpling courier in Chicago told Motherboard that workers will benefit from these new changes, in particular, moving away from the reliance on tips, which he says turned off customers, to a model where business owners can charge a percentage of the cost of groceries. As has been widely noted, tipping culture is a recipe for sexual harassment, poverty wages, and many forms of discrimination.
“Dumpling did a good thing and did research that found we’re charging too much in tips, and not getting repeat customers, but a lot of people have come to the Dumpling platform from Instacart and DoorDash with the old gig worker mentality, which is to make money off tips where there’s no guaranteed pay,” said Telles. “Instead the new model allows you to charge a percentage of the order. I still make really good money, but I don’t need tips; the tips are extra fun.”
Regardless of how the company is pitching this new model, and whether it ultimately leads to better pay for workers, many business owners say that their initial experience with it has been negative, and that attempts to talk about it have been silenced.
Dumpling’s decision to shut down the Facebook group came after it muted business owners, removed posts, and later booted 13 business owners out of the group after they posted comments criticizing Dumpling for altering its pay model. Workers told Motherboard that they were raising genuine concerns about changes the platform made without consulting workers. Motherboard was not able to obtain screenshots of posts that were censored, but did review screenshots of heated conversations in the Facebook group where some workers came to the defense of Dumpling, and accused workers of criticizing a company that actually cared about its workers.
“I posted about a problem I had with pre-funded credit cards, but they didn’t want anything anti-Dumpling in the group and I got muted,” another Dumpling business owner based in Pennsylvania told Motherboard. “I wasn’t allowed to comment or post for a certain number of days. Eventually I was booted from the group.”
At the time, Dumpling sent business owners booted from the group private messages saying they had “broke[n] group rules,” by not “being kind and courteous,” “trolling,” and “verbally attacking other members of the team,” according to a screenshot reviewed by Motherboard.
On December 22, the admins of the Dumpling Facebook group temporarily suspended the group. That decision became permanent on January 19. In a post, admins for the group wrote, “After careful consideration we’ve made the decision to close this Facebook group,” according to a screenshot obtained by Motherboard.
“The closure of the Facebook group is part of a full transition to Dumpling’s in-app communication with Business Owners, which reaches the full audience of Business Owners and not just those with Facebook accounts,” Shapiro, Dumpling’s CEO, told Motherboard when asked about the closure of the Facebook group.
“As a business, Dumpling wants to allocate resources to be able to support and coach business owners, which have proven to be very successful, instead of the increasing effort required in moderating the Facebook group as it grew to ensure it remained a constructive and respectful exchange of ideas,” Shapiro continued.
For many gig economy companies with workforces that span the entire country that are not afforded the traditional benefits of employment or a shared workplace, social media groups serve as a critical resource for workers to get information about their pay and working conditions, and the only point of contact between workers. Dumpling’s Facebook group was unique in that the company’s Shapiro would regularly make himself available for questions and so-called Dumpling “coaches” would offer resources and training to help business owners improve their earnings.
The censorship and ultimate closure of the Dumpling Facebook group bears a resemblance to that of Target’s delivery app, Shipt. As Motherboard reported last year, the moderators of so-called Shipt Shopper Lounge, a private Shipt-controlled Facebook group with more than 140,000 members, frequently shuts down comments and commenting sections, and bans workers that criticize pay and other working conditions.
Many workers are leaving Dumpling because of the new changes to start their own businesses using the credit card processor Square and clients they picked up on Dumpling. The problem with doing this is that workers do not have fraud protection and have to front large groceries bills on their credit cards.
While some workers are happy with the changes, others say they make Dumpling look more like Instacart or Shipt, leaving no ethical grocery delivery platform widely available in the United States.
Other workers are holding out hope that Dumpling will reverse its new tipping policy.
“I respect the fact that Dumpling came up with an alternative model to allow people to be business owners, but I feel the immaturity is getting in the way,” the Dumpling business owner in Pennsylvania who was banned from the Facebook group before it was dismantled but continues to conduct her business on the app, said.
“If they rolled back these changes, we’d be very, very happy,” they continued. “A lot of the people who moved off would be happy to come back.”
This article previously stated that customers could remove or lower tips on orders, a practice known as “tip-baiting.” This is not possible on the Dumpling app. Motherboard regrets the error.
