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Economy

De-Uberization? Food Delivery Apps Opt For Employees Over Gig Economy

Startups that offer to deliver groceries in less than 15 minutes have learned from the past and are hiring full-time employees, even if they need temporary workers to meet demand.

De-Uberization? Food Delivery Apps Opt For Employees Over Gig Economy

An Uber Eats delivery man waiting in Toulouse

Adrien Lelièvre

PARIS — In recent years, couriers working for meal delivery startups generously financed by investment funds have become one of the symbols of the "uberization of work." While mostly their freelance status remains widespread worldwide, the standard is shifting. In February 2021, the British meal delivery specialist Just Eat struck a chord by announcing the recruitment of 4,500 permanent staff in France, a country known for its strong worker protections and powerful unions.


Meal delivery apps like the British Deliveroo and the U.S. Uber Eats have not taken the plunge. But more and more grocery delivery startups — which offer supermarket goods in less than 15 minutes — employ their staff, using temporary workers only to meet peak demand.

Better working conditions

This choice is a response to the growing criticism of the "gig economy” and also a precaution for the future. In several European countries, the courts are threatening to reclassify delivery workers using bikes, motorcycles or cars as employees. In France, the creation of a third status — alongside that of employee and self-employed — is being debated.

By taking the gamble of hiring their employees, startups allow delivery personnel to have a fixed salary (often at the minimum wage), paid vacations and full equipment (bike, helmet, uniform, etc.) to work. The workers also benefit from rooms where they can wait between orders and have access to bathrooms.

Startups in the sector are losing about four euros per delivery

"It's incomparable to the working conditions I've experienced at Uber Eats," says a courier for Gorillas, a German on-demand grocery delivery company. This courier works 24 hours a week while also completing school.

Beyond the social aspect, working as a salaried employee is a way to offer "the best delivery experience to our customers," says Quentin Chaleard, the general manager of the Berlin-based delivery startup Flink. Chaleard points out that Flink’s delivery drivers are trained and supervised. Unlike meal delivery platforms, most grocery delivery companies have chosen to integrate all operations. However, the actual delivery of goods represents a high cost for them, with the customer only paying two euros on average.

Gorillas is a German on-demand grocery delivery company

Gorilas

An industry in the red

With three trips per hour per delivery person, startups in the sector are losing about four euros per delivery, according to estimates by Olivier Dauvers, a specialist in food distribution.

“One of the economic challenges is to increase the number of trips per hour by reducing the delivery area," says Quentin Chaleard. To date, Flink's couriers make between one and two runs per hour on average, Chaleard says.

To pave the road to profitability, grocers 2.0 will also have to find solutions upstream of the value chain. This could mean more direct sourcing, agreements with distributors to benefit from their central purchasing, an increase in the average order size or warehouse automation.

Customers could also be asked to contribute more by paying a higher rate for delivery, for example via a dynamic pricing system, as Uber and other ride-hailing apps already use. (Ordering a car often costs more during peak hours or when weather events make walking or public transportation undesirable.) As for the status of the human bringing food to your door, the question may one day no longer be relevant. Yandex, which has launched a quick commerce service in Paris (Yango Deli), is already testing delivery with autonomous mini robots in Russia and abroad.

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