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Platform Services

Platform-mediated food delivery services (referred to simply as “platform services'' hereafter) are systems that connect restaurants or food providers, delivery riders and consumers via a digital platform (figure 1). These services – including companies such as Uber Eats, Lieferando, Delivery Hero amongst many others – provide customers with access to deliveries of both prepared food [from restaurants] and non-prepared food [from grocery stores]. Over the past year of the global Covid-19 pandemic, these services have been extremely valuable to people who have been trapped at home due to self imposed isolation, mandated lockdowns and stay at home orders, as well as those who do not feel safe in crowded public spaces such as restaurants and grocery stores. The popularity of these services within the tech sector can be estimated by their valuations; European foodtech unicorns were valued at €92 billion in 2020, up from €38 billion in 2019 (Five Season Ventures & Dealroom, 2021). This is unsurprising considering the boost in food delivery orders over the pandemic; during 2020, delivery orders in the UK were up 400% over the same period in 2019 (link).


Figure 1. Indirect and direct interactions on food delivery platforms

Platform services are rapidly reshaping the geography and lived experience within our cities and as such, lie at the heart of this research project. These platforms use “geographies through the digital” such as GPS data to locate and connect the various parties that they mediate; in doing so, they create new “geographies produced by the digital” (Ash ref), by determining who gets access to which restaurants and where riders work through the delivery zones and bubble they define. Platform services touch and leave their trace on every element you will encounter on this website.

For full disclosure, I [Erich] have been employed by a food delivery start-up in Berlin for the past 4 months. While the company I am working for does not rely on a gig economy to fulfil its services – as most of the companies in this sector do – it still operates using the same tech and start-up mindset.

Platform services have both low barriers for entry and low switching costs for consumers. Since platforms only serve as the mediation between the actors: restaurants, riders and customers (figure 1), the only real barrier for entry is creating the software that creates this connection. Restaurants create the products to be consumed and riders are often hired as freelancers who, aside from a branded jacket and backpack, provide their own equipment such as a bike and smartphone – in some places where the labour market is more regulated the riders must be given all the same benefits as traditional employees. Even the cycling routes that are used by the riders are not created by the platforms themselves, but come from 3rd party services such as Google Maps, though even the provided routes are usually disconnected from the reality faced by the riders who must supplement the routes with their own learned spatial experience in order to meet the unrealistic delivery times (Heiland, 2021). Platform services use an appeal to entrepreneurialism and freedom in an attempt to  create a romanticized vision of food delivery (see image 1) while in reality they actively fight against labour regulations and unionization and only address indecent working conditions in response to public shaming (See: Foodora is Pushing Anti-Union Propaganda..., Grocery Delivery Workers at Imperfect Foods Vote to Unionize, The Labor Battle for the Right to Pee).


Image 1. Sponsored delivery job ad, appeared on the Facebook profile of one of the researchers of this study. The post says: Looking for a job? We're opening our delivery service in Turin! We offer you a contract with competitive hourly fee, insurance coverage and you will be able to deliver with your own personal vehicle. (May, 2021)

From the perspective of the customer, there is virtually no cost to switching platforms, they must simply install another app onto their phone. And as new services seem to be continually launching – offering discounts to attract customers as they do – there is every incentive to use whatever platform is offering discounts at the moment.


Uber Eats discount code painted on the pavement when the service launched in Turin, Italy (May, 2021)

This all results in cash burn by platform services as they attempt to gain a monopoly after which they hope to raise prices and become profitable. Unfortunately, as the entry barriers are so low, there are always new competitors entering the market. According to a report by Sakunia & Parikh, startups entering markets with low barriers for entry and low switching costs for consumers will get caught in a spiral of cash burn caused by price wars over customer acquisition and retention (Sakunia & Parikh, 2020). These companies are unlikely to ever become profitable.

From my perspective – working in the startup world generally and for a food delivery service specifically – the (food)tech sector generally holds an attitude of superiority over traditional work sectors which manifests itself in a fetishization of “smart solutions”, an extreme confidence in their ideas and the overpromising of deliverables which can often border on hubris. The motivating goals for those driving the sector is not to improve working conditions or provide better services for customers, it is to have the next great(profitable) idea. My workplace does not expect to be profitable for its first two or three years until they hope to reach a large enough scale of operations to turn a profit – though it isn’t clear to me what scale that is – until then it relies on funding from investors who hope this company will become the next success story  – like Amazon or Uber – and provide them with huge capital gains.

Erich

References

Ash, J., Kitchin, R., & Leszczynski, A. (2018). Digital turn, digital geographies? Progress in Human Geography, 42(1), 25–43. https://doi.org/10.1177/0309132516664800 

Five Seasons Ventures, & Dealroom.co. (2021). The State of European Food Tech 2021. https://foodtech.vc

Heiland, H. (2021). Controlling space, controlling labour? Contested space in food delivery gig work. New Technology, Work and Employment, 36(1), 1–16. https://doi.org/10.1111/ntwe.12183

Partridge, J. (2021, January 12). Just Eat Takeaway orders soar on back of European lockdowns. The Guardian. https://www.theguardian.com/business/2021/jan/13/just-eat-takeaway-orders-soar-on-back-of-european-lockdowns-covid 

Sakunia, D., & Parikh, P. (2020). High Cash Burn in a Price Conscious Economy with Low Switching Costs. Seventeenth AIMS International Conference on Management.