Democratising the Right to Laziness
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One of the defining trends of the 21st century has been a push towards convenience. As technology improves and the middle class grows, people seek out ways to make life more convenient. However, modern comforts are effectively trojan horses.
We’re enticed by excessive discounting and exclusive offers to use services we’ve never needed before. Businesses provide us with ‘innovative’ conveniences at low prices to hook us in. This in turn moulds our psyche by lowering our resistance to spending and over time as prices inevitably rise, we aren’t able to wean ourselves off these products.
The latest of these is the rise of on-demand grocery delivery. In line with human nature to want instant gratification, services such as Gorillas, Deliveroo, Getir and Milkrun promise 10-20 minute delivery of all our groceries for a small fee. As Turancan Salur, Getir UK’s general manager puts it, these services are “democratising the right to laziness”.
To be able to access such convenience comes at a cost. In past instances, this has been largely monetary and maybe psychological. However, as services aim to be more hyper efficient, the cost is borne by the people facilitating these services for our benefit.
Efficiencies in Last Mile Delivery
To fully understand this problem, it’s important to appreciate the difficulty of last mile delivery logistics. It's the most expensive and time consuming part of the process. As the name suggests, last mile delivery is the final stage of the delivery process, moving goods from a transport hub or warehouse to their final destination (someone’s house).
To drive costs lower, delivery is typically done in high volume and delivered through planned routes to ensure efficiency. For express deliveries, these routes are compromised, and volume is disregarded to ensure speed. To date, Amazon has pioneered the art of rapid delivery by offering Prime customers 2 days down to 1 to 2 hour delivery, aided by localised micro-fulfilment centres to partly speed up the process.
Micro-fulfilment is a strategy that combines the speed of localised, in-store pick up and the efficiency of large, automated warehouses. By placing micro-fulfilment centres near the end customer, this brings down the cost and time of delivering goods. These micro-fulfilment centres typically take up between 300 to 1,000 square meters, significantly smaller than a traditional fulfilment centre which might be 30x larger.
In addition to being smaller, micro-fulfilment centres tend to use hardware and software to boost efficiencies. Robots are used to transport items around the warehouse to human workers who package the final order. AI software is used to continually optimise the placement of different goods and the overall supply chain. This approach leads to lower overhead costs, enhanced agility in setting up a warehouse and faster delivery to the end customer.
Rapid Grocery Delivery
While there’s nothing wrong with driving efficiency (that’s what innovation should do), the issue lies with how this efficiency is used. This leads us to the emergence of on-demand grocery delivery services all over Europe, the US and more recently Australia. To show how quickly this area has grown, VCs have deployed more than US$14bn into on-demand grocery delivery services since the beginning of the pandemic.
Gorillas, which was founded in May 2020, has already surged to a US$2.1bn valuation, its Turkish counterpart Getir has a valuation of over US$7.5bn, not to mention German based Flink is also valued at US$2.1bn. Despite this, new players continue to enter the market, such as UK based Jiffy and Zapp as well as French startup Cajoo securing tens of millions of dollars in investment.
All of these businesses are pretty much the same. They all offer 10-20 minute inner-city grocery deliveries at incredibly (and somewhat unbelievably) low price points. For example, Sydney-based Milkrun offers free delivery, with individual items marked up 5-10% above supermarket prices. At this stage, delivery startups are prioritising growth at all costs, just like the ongoing ride hailing wars between Uber, Lyft, DiDi and Ola.
So is this model sustainable? Well, Bain retail expert Joelle de Montgolfier sums it up quite nicely: "It is literally impossible to make money,". So why have VCs chucked ridiculously large sums of capital at these businesses? Partly due to the enormous consumer staples market, but more in the hopes of growing the pie by reducing the barrier to accessing groceries for people (i.e. making it easier to buy groceries at will).
All of these services are under enormous amounts of pressure to hopefully achieve a certain level of scale where raising prices makes sense. It’s likely going to result in a few fake ‘winners’ as the fight to acquire more customers will never end. As Nazim Salur, the founder of Getir, states, “It’s a race against time” to expand and grow as quickly as possible. For Getir this meant accelerating “plans to go to more countries, because if [they] don’t [then] others will”.
This level of growth, and the pressure of continuously making deliveries in a short amount of time almost certainly puts an immense strain on the couriers and warehouse workers from these businesses.
Growth at the cost of humanity
The amount of mental and physical strain gig workers experience is well publicized through countless protests. A large amount of these protests are centred around whether these workers are classified as contractors or employees. Whilst rapid grocery delivery startups have taken this into account by employing their couriers as full-time workers, this leads to the issue of higher operating expenses. Which in turn cuts into already razor thin margins, meaning these startups push their employees more and scrutinize them heavily for performance, exacerbating the mental and physical strain that service workers already face.
Back in June, Gorillas riders staged protests after a rider was fired for “gross misconduct” during his probationary period. Since then, it has emerged that the Gorillas working culture is incredibly demanding as an anonymous employee states that “For (CEO and founder Kağan Sümer), it was make or break. If we had five delayed orders, he’d send videos of himself swearing and screaming to a WhatsApp group”. Moreover, as reported by Sifted, a common complaint from riders is that the heavy delivery bags sometimes weigh over the 10kg limit stipulated by the company. This in turn has led to many employees suffering from chronic back pain and other debilitating issues.
This is worrying. We’ve already seen numerous reports of gig-economy workers being involved in car crashes and tragically dying. This was before there was a race to make a delivery in a short amount of time. Now, heavy loads and a strict time limit on each delivery make the job incredibly dangerous to the point where riders are almost forced to take risks to succeed at their job.
This is reminiscent of the pressure Amazon warehouse workers are under on a daily basis. Warehouse staff are notoriously pushed to the brink, being forced to walk at “Amazon pace, which is just shy of jogging”. In that same way, on-demand grocery services force their riders to make quick deliveries, else the company foots the bill by issuing free credits or delivery coupons to customers. And when that happens, it's almost inevitable that the rider in question gets reduced shifts or is terminated altogether.
How far are we willing to go in the pursuit of convenience? And at what point does the preservation of humanity outweigh our need to order a feast at the tip of our fingers?
The future of convenience
Whilst the pursuit for convenience is probably not going to end any time soon as people can be selfish, and endless pools of money from VCs hide systemic issues, continuous developments in robotics technology will hopefully remove humans from the equation.
Call me old-fashioned, but I enjoy strolling through supermarket aisles and making serendipitous purchases. I hope our pursuit for convenience above all doesn’t end up like this scene from Wall-E.
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