I think one of the most fascinating things to me when I started doing delivery was how intensely and fiercely loyal the Grubhub driver community was to Grubhub. It was completely fascinating to me, because here we are, independent contractors and not employees, but they had the kind of loyalty that you usually only see in an employee environnment. You saw drivers thinking of Grubhub as “we.” They would have nothing to do with any of the other platforms. They were just incredibly loyal.
I found myself thinking, how do you do that? Despite my opinions about how Grubhub does certain things, I have to say it impressed me. How do you get independent contractors to develop that level of loyalty?
But you know, just as fascinating is, how quickly that loyalty disappeared. Within a couple of months, I watched that relationship between Grubhub and their drivers get to where it wasn't all that different than that the other platforms had with their drivers.
How can a gig company gain and maintain a reliable workforce?
How does this happen? What does a company do to gain this kind of loyalty, and how do they lose it so quickly.
I think that's part of a bigger question for delivery companies: How do you attract drivers, how do you KEEP drivers, and how do you do that without breaking the bank? I do think a lot of what kept drivers happy with Grubhub was the old pay model, but the pay model was a money loser for Grubhub. Changing the model early in 2019 may have had as much to do with the drop in loyalty as anything. There were other changes as well that I'm sure contributed to the change.
The current reality for delivery companies
This is an environment where you have all four major platforms are wildly un-profitable. They are all leaking money like crazy. They are also all under intense pressure from stock holders or investors to start becoming profitable. This creates a problem for these companies. If the answer is money, where is the money going to come from? There really isn't a place where they can increase revenue to offset that money. They can't charge the restaurants more, and they can't really increase the fees they charge the end user.
The bottom line here is, we're not going to see the fees they pay us go back up. These companies don't have the money and aren't willing to allocate the money to increase what they pay us. You can probably expect fees to continue to drop.
But how are they going to keep us interested in delivery? How do they attract us and keep us loyal to the platform if they can't or won't pay out more money? Are there things that companies can do to attract drivers and keep us from switching platforms? How can they do that without increasing spending?
That's the topic today. We're talking to some researchers who are studying this topic. They are looking the logistics of crowd-sourced delivery, and into the kinds of things that are important to delivery drivers.
About the research.
I initially saw a link in one of the Facebook groups requesting drivers fill out this survey. I decided to go ahead and fill it out, and I just found the whole topic fascinating. Lance Saunders from the University of Tennessee at Knoxville was the lead contact, so I decided to reach out and see if he'd be interested in talking about it.
Okay, if you've read much of what I have to write, you know I was geeking out. This kind of stuff is fascinating to me. I'm always intrigued by the state of the industry. Just this morning, I found this article speculating on if a merger of delivery companies is inevitable. I'm the kind that likes to think about those scenarios and evaluate if they have great potential.
You can see me kind of geeking out about this stuff in other articles and podcast episodes. In Episode 51, I speculated on if there were a better way to approach logistics. I also wrote about whether or not this particular industry were sustainable. Ultimately, I think the business model is a house of cards waiting to collapse. There's a few others like that, but you can tell that I was loving this discussion that we had today.
I reached out to Lance Saunders to see if he'd like to talk about the study. I expected it might be more an offline discussion, then I could put together an article about the study. But the beauty of it was, Vince Castillo from THE Ohio State University and Bill Rose from Iowa State joined in on the discussion, and it turned into a nice ready made podcast episode. I hope to get a transcript added soon.
So we are joined today by Lance Saunders, Assistant Professor with the Department of Supply Chain Management with the Haslam College of Business at the University of Tennessee. Vince Castillo is Assistant Professor of Marketing and Logistics at the Fisher College of Business at the Ohio State University. William Rose is Assistant Professor of Supply Chain Management with the Debbie and Jerry Ivy College of Business at Iowa State University.
I encourage you to participate in the study. It's a good place to make your voices heard. I'm pretty sure at some point some muckety muck (a verified academic term) in one of these delivery companies is going to see what they put together. It's a good opportunity to voice your thoughts over the kinds of things that are important to you, and the kinds of things that would make you feel more or less loyal to a particular platform.
You can take the survey at https://app.survature.com/s/6vZYxrhiSHil/. Lance also sent over this QR code that will also guide you to the survey.
What is important to you as a driver?
I want to personally thank these gentlemen for joining the podcast and sharing their insights and thoughts. I know I was asking them about what they've noticed so far – something I realize it's way too early in their research to really be able to answer. But overall, I had a lot of fun doing this episode because it really points out the challenges that these delivery companies face. In the end, those challenges have a direct impact on those of us who contract with them.
You can imagine I've got some thoughts on the things companies can do. They'll spin around in this head of mine for a bit and at some point I'll probably share some of them.
But before I do, let me ask you: What do you think? Obviously, better pay will always make us happier. But beyond money, what would make a difference to you? Here's a few questions you could think about – I'd love to get your thoughts in the comments or shoot me an email.
- Besides the pay model, what's the one thing that makes you most likely to deliver for the company that you do most of your deliveries for?
- What could a company do that might make you consider switching to them?
- If you multi-app, are there things a company could do that might make you more likely to deliver exclusively for them?