The good news is most ‘q-commerce’ workers have employment contracts. The bad news is they still get squeezed.
Take out your smartphone. Open an app. Swipe, tap and place an order. And within 15 minutes an impressive range of fresh groceries is delivered to your door.
This is the remarkable convenience promised by the quick-commerce platforms—such as Getir, Flink and Gorillas—which have exploded across Europe since the pandemic. While their prices are marginally higher than when shopping in-store, a flood of special offers has made the use of such apps increasingly popular in European cities.
The rider who delivers your groceries will more than likely enjoy an employment contract—unlike typically self-employed workers on platforms such as Deliveroo. The bike will typically be an e-bike. And rather than the goods being gathered from an out-of-town warehouse, they will likely come from a ‘dark store’—small warehouses open only to ‘pickers’ (those who pack the groceries for collection) dotted throughout cities for access and efficiency.
So convenience for consumers, decent work for riders and pickers, and environmental credentials to boot? New reports we recently produced for the Foundation for European Progressive Studies and UniEuropa challenge however some of the claims of q-commerce firms. Their business model is highly unstable—meaning highly casualised, intensive and often unsafe working conditions for riders and pickers.
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‘Burn rate’ eye-watering
As with much of the platform economy, q-commerce firms are heavily financed by venture capital. In 2021 alone, $18 billion was invested in them—of which €4.5 billion was spent in Europe. Gorillas—founded in Berlin in May 2020—became Europe’s fastest ever unicorn when valued at over $1 billion less than ten months later. But such vast injections do not simply reflect investor excitement: they are necessitated by the eye-watering ‘burn rate’ of the sector.
Quite simply, the economics of q-commerce as currently structured do not add up. We estimate that, on a €25 basket of goods, a typical bricks-and-mortar supermarket would make a margin of just 2.4 per cent. By contrast, a typical q-commerce firm would lose 13 per cent (around €3.25), due to the expense of extra services such as packing and delivering goods, which cannot easily benefit from economies of scale.
Gorillas was estimated to be losing €60 million a month in 2022. Facing a funding crisis, it was acquired by Getir in December, at a significant writedown. But Getir is also haemorrhaging cash (around $1 billion last year). The global rise in interest rates, precipitated by the United States Federal Reserve’s dramatic base-rate hikes since the beginning of 2022, has left venture capitalists highly reluctant to pour in more.
Is q-commerce then merely an epiphenomenon of the unusual state of capital markets from 2008 to 2022? Despite their fragile financial foundations, the evidence suggests otherwise. While their hyper-scaling business models and integration with venture capital mean q-commerce firms have much in common with the rest of the platform economy, they have some unique characteristics.
Most platforms use an ‘asset-light’ model to outsource risk while profiting from simple intermediating transactions: Uber owns no taxis, Booking.com no hotels. But q-commerce platforms have high investment in fixed capital (warehouses and equipment) and intangible assets (technology and supply-chain management). So while it has been estimated that Uber allocates about 90 per cent of capital spending to driver and rider subsidies as well as advertising, the analogous figure for q-commerce is some 70 per cent. This is still very high—but it makes the economic footprint of q-commerce firms far heavier than that of other platform ‘aggregators’.
As such, even if individual firms go bust, they are likely to be acquired by rivals eyeing up their property, vehicles, customer databases and supplier relationships. Even in the face of a capital ‘funding desert’, then, the industry as a whole is likely to persist in some form.
But the shaky foundations of q-commerce are driving a desperate attempt to forge ‘paths to profitability’. Unfortunately, these are being pursued on the backs of workers in the sector. While the widespread use of employment contracts might lead one to expect better conditions than in other parts of the platform economy, our interviews with workers across Europe proved troubling.
We found significant evidence of low pay and wage theft, disrespect for workers’ contractual terms—such as on sick leave and holiday pay—and health-and-safety violations. Relations between managers and workers were often poor and based on frequent disciplinary measures, while work was intensified through algorithmic management of delivery-time targets and orders per delivery.
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There is little evidence that such ‘low-road’ managerial techniques are leading to durable profits for firms. But they do risk undermining existing conditions and collective agreements in retail and logistics.
Regulation is needed to ensure firms do not persist further down the path of squeezing workers to placate investors—and instead consider alternative routes to turning a profit. The pending European Union directive on platform work can, if adopted, play an important role in the protection of q-commerce workers, particularly its provisions on algorithmic management.
The proposed rules would increase transparency in the use of algorithms by digital labour platforms, require human monitoring and provide the right to contest automated decisions. Crucially, platform workers’ representatives would have to be informed and consulted and information supplied to labour inspectorates. This should facilitate enforcement of the rules—where our research has revealed the main challenge lies.
Indeed, q-commerce workers generally dispose (as employees in the main) of a range of labour rights under EU and national law but their realisation in practice leaves much to be desired. While enforcement of these is primarily the responsibility of member states, EU policy-makers may wish to reflect on additional support for them in this difficult task, especially vis-à-vis the crucial work of labour inspectorates.
Policy-making processes and enhanced enforcement are likely to take time. But our research also highlights inspiring examples of trade unions and worker collectives taking action to improve the lot of workers in the here and now.
In Germany, autonomous groups of workers have organised strikes over issues such as pay, conditions and unfair dismissals at Gorillas. They have organised works councils and are seeking to do the same at Getir. In Spain, workers’ collectives have taken industrial action at Glovo and Getir, and established works councils in both. Supported by official union federations, works councils are now bargaining with management over conditions such as vehicle maintenance, health and safety, and workload—with tangible improvements reported by workers.
The rise of q-commerce poses major questions about the organisation of the European economy and its labour markets. What steps should be taken to ameliorate the boom-bust cycle generated by venture-capital markets’ funding lines to disruptive, hyper-scaling platform firms? How can the conditions of platform work be improved, beyond simply ensuring workers are covered by formal employment contracts, to address other weaknesses in regulation and especially enforcement? And, finally, can unions develop creative strategies to reach and organise workers in the platform economy, regardless of employment status?
In the meantime, the drive for convenience will continue to come at a social cost.