Is the discussion on the gig economy still on-topic?

The greatest frustration for policy makers and researchers on the platform industry is the lack of access to platform information, such as user data and more general data, like transaction numbers and gross revenue. Luckily, there is an interesting exception in the Amsterdam based platform company TakeAway.com.

As this platform is publicly traded, it is obliged to publish their (officially audited) results. Moreover, the investor calls, the question time by phone in which investors can ask all their questions which are to be answered directly by the board, is public. These calls are extremely interesting and educational.

The takeaway —how appropriate— of the call regarding the yearly figures of 2017 is that the platform doesn’t see the rather purely logistic platforms, like Deliveroo and UberEats, as their competitors and doesn’t really believe that these models will ever be viable.

TakeAway got involved in the discussion by announcing that they will hire and insure their own deliverers and give them an honest salary. In such, they openly distance themselves from the freelance solutions exploited by Deliveroo and UberEats. Delving a bit deeper into the numbers, one sees the beauty of this thought, yet that it is of little or no effect practically.

Out of the total number of executed orders in 2017, grossing around 68,3M, only 1.4% has been dealt with by the platforms own deliverers. In 2016, it accounted for only 0.5%. The end goal is to grow to a maximum of 5%. Why? Well, according to TakeAway, organizing the logistics of this activity will always be a loss-making business. TakeAway uses their own deliverers as an acquisition tool for new clients and restaurants and as a branding tool; they want their own deliverers to be visible to the outside world and to contribute to their ‘brand awareness’. Something of greater importance since the appearance of Deliveroo and UberEats, I assume.

We have no clue about the working conditions of the other 98,6% of the executed orders. Are they hired? Have they been paid under the table? Are they insured? Etc. Etc. In the case of TakeAway, you can’t say anything relevant regarding the working conditions of couriers in the food delivery sector as long as you don’t know the first thing about the situation of the majority. Especially when taking into account that the company considers direct phone-ordered meals at the restaurant as their largest rival. Their estimate presumes that 70% of the total take away orders at restaurants (so, ordered by phone to be taken home by the individuals themselves or the courier hired by the restaurant) are made without the interference of any platform. With this being clear, you may conclude that the number of deliverers working for the platform of a dominant market player is almost negligible.

Bottom line: 

In discussions on the gig economy, the complete picture is hardly ever taken into account. We notice, for example, that bicycle couriers working through an app are just a fraction of the whole market. Trying to have an informed discussion about food delivery couriers while forgetting to include the market’s majority, makes the conversation completely useless. The food delivery sector is not an exception; I see more sectors with the same massive bias in the discussion.

Looking at the market from this perspective, it is of interest to see how platforms could centralize a fragmented market in order to do something beneficial for the sector as a whole.

Staying on point regarding TakeAway: the platform has a respectable number of 32,929 affiliated restaurants. Assume that about 30,000 restaurants have their own (hired) deliverers. TakeAway, as a platform, could easily offer these restaurants extra services in order to take better care of the protection and rights of these couriers. This centralization (through a platform) of a fragmented and uncontrollable existing market could first provide for possibilities to enable automated enforcement by means of reviews or obligatory security videos at profile creation, and secondly for the potential of making certain existing legislation superfluous, since the centralized character of the platform and the technical possibilities have made them superfluous (providing the platform can be audited by, e.g., a trusted third party).

All of this might be far-fetched, but with foregoing example I would like to stretch that one should have a broad perspective on things and consider all variables of a market. The gig economy isn’t a separate market, but part of THE economy. Work provided via platforms is in many cases not new. Platforms centralizing a fragmented and uncontrollable market in one way or another, can contribute to the benefit of the market as a whole in making it meet social needs and desires.

This post is also available in: Dutch

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