Aggregators uncovered: When apps deliver food and misery
Many of the delivery businesses that have sprung up in the last few years make no financial sense and may be turning us into monsters. I’m talking about app-based companies including Uber, DoorDash and others around the world. They aim to bring us groceries, cooked meals, a home cleaner, cases of beer or a trip across town — all better, faster and cheaper than how we’ve always done things. They are the logical next step in our consumer culture, and they create new types of jobs. Deliveries of anything under the sun might also put the power of Amazon into the hands of local businesses.
But these app delivery services are at best an economic mirage and at worst expanding misery by making it too easy to ignore their true cost — financial, human and community — in the name of convenience. For years, my question about companies like Uber was … how? How did it make sense to take a 20-minute trip across San Francisco for the price of a sandwich? How was it possible for an app to connect me with a courier and a local restaurant and get a burger delivered for what seemed like peanuts?
The answer in many cases was that it did not make sense. Uber has been in business since 2009 and so far this year it spent so much to stay afloat that it effectively set on fire 14 cents of its cash for each dollar of revenue. That is not what healthy businesses tend to do, and this was an improvement for Uber. The food-delivery companies in the United States are mostly unprofitable, too.
Young app-based companies built for consumer convenience no longer have the luxury to spend cash in stupid ways. Most of these companies are now trying to buy out competitors, raise prices, or squeeze couriers or restaurants for better terms. Or they are hoping that the companies’ economics stink less as they deliver more types of goods and bigger orders. Sure, these tactics might work in some places and some of the time. Or they might not.
More recently, delivery companies that make even less sense have sprouted everywhere. In 2015 Uber rides seemed impossibly cheap, yet now companies promise to deliver a pint of ice cream and condoms in 10 minutes or less. These companies operate something like little 7-Elevens, except they absorb the cost of both buying products and sending a guy on a scooter to your home. This might make sense if people were paying for the privilege of skipping the store, but the fees or markup on products are relatively minimal. How? Two answers: They are subsidised by eager investment firms — for now, as Uber and others were for years. And, like other app-based delivery services, they pay for themselves partly by squeezing more from the people with the least power in the transaction.
A series of articles painted a picture of impossible demands on delivery workers for a multitude of app-based services. Low-wage work has always been precarious, and more affluent people benefit from that in the form of cheaper products and services. But app-delivery couriers are compelled to continually do more work, faster and for less money or fall out of favor with the computer programs that assign the best jobs. Maybe this work could improve, voluntarily or by force. And it’s possible that labor shortages and courier demands might compel app companies to improve working conditions. The most significant innovation of these apps is obscuring the true cost of convenience. We are learning to expect everything fast and easy and not think about the toll that takes on people and communities.