Grab, itself, enjoyed a 56 per cent, year-on-year, increase in gross merchandise value (GMV) for deliveries in 2021, the kicker being that even after most Southeast Asian countries had eased restrictions in the fourth quarter, GMV for deliveries still rose by 52 per cent compared with the same quarter in 2020.
The potential for growth in the online food delivery market in Southeast Asia, both through customer acquisition and extracting higher value from existing customers, has made the market fiercely competitive. Grab, which operates in eight Southeast Asian markets, now claims (citing Euromonitor) to have 51 per cent market share for online food delivery, more than twice the share of its closest competitor. But it operates in shark-infested waters, with Foodpanda, LINE Man, Deliveroo and others all getting in on the action.
Between restaurant and customer, there’s chaos
But there is a nagging question: Are there some costs of the food delivery product that are hidden and being shifted from the companies to the drivers and the communities they serve? If so, these costs don’t show up in financial statements, aren’t displayed in the slick advertising spiels of the delivery companies, and tend to be ignored by the customers, who are wowed by the end product.
Take Grab for example. The Grab superapp is, to be clear, a thing of beauty. It offers a great choice of restaurants, is simple to use, and an order can be submitted with the press of a few buttons. Then there is speed of delivery and efficient communication between customer and driver before and during the time the order is on its way. It’s hard to beat the experience. Unlike many retailers whose marketing claims say their objective is to amaze their customers, Grab actually does it.
But there are some serious issues, which you don’t see until you go out on the road yourself. Drivers are paid tiny fees for each delivery; for example, my order for Indian dinner for two people last night was dispatched from a restaurant 2.4km away from my home and came to a total of THB930 (about $40.50).
Of this, only THB10 went to the driver. It goes without saying that the drivers love to get tips, and can look disappointed when asked for change. They can even have difficulty finding it.
What happens, with or without tips, is that delivery workers have to drive like demons to make enough money to earn a living. They take insane risks on the road, and often not only on the road but by driving on the footpath, endangering themselves and others in the process.
There are no official statistics available on how many accidents involve food delivery drivers or are caused by them, but when asked, most drivers are quite open about it because they themselves are well aware of the risks they take and the dangers to which they are exposed. They are happy to get the word out.
One astonishing survey that Rocket Media Lab conducted of 1100 food delivery drivers in Thailand makes the point: 28 per cent of the drivers had gotten into between five and 16 accidents, and another 66 per cent had been in one to four accidents.
In a part of the world where road accidents are a leading cause of death, it isn’t helpful to have endangerment underpinned by economic necessity.
As the unsung heroes of the pandemic, food delivery drivers have arguably been poorly rewarded. Particularly as delivering food comes with the usual downsides of any customer-facing job, including abuse from customers themselves. Most delivery drivers want to be rewarded better and placed under less pressure.
Companies such as Grab, which refer to their food delivery employees as their ‘driver partners’, don’t talk about driver morale much, nor the high propensity for their drivers to be involved in accidents nor their plans for ensuring drivers are adequately trained, protected, and compensated for the risks inherent in the job.
For Grab specifically, the focus lately has been on incentives to attract new mobility (ride-share) employees, and consumer incentives to ensure that momentum in the food delivery segment is sustained after all lockdown restrictions are eased and the dining-out trade returns to something approaching normal.
In the fourth quarter, commissions Grab paid to merchants for deliveries were north of 18 per cent. However, consumer incentives rose 73 per cent year-on-year, from $616 million to $1.10 billion, siphoning off most of the delivery revenues. Despite these incentives, which the company refers to as ‘investments’, they expect the delivery business to break even by the end of 2023.
They shouldn’t do it by putting their employees at risk. Yesterday evening, as I was enjoying the aforementioned Indian dinner on my fourth-floor balcony, another Grab food delivery driver pulled up and handed over a dinner to a customer who lives in the same building. Looking down into the street below, I and all of the other residents could see and hear the customer, an elderly gent from Western Europe, shrieking at the driver over and over again in English for having initially gone to the wrong building. For the driver’s 32 cents compensation, it just wasn’t worth it.