The big news this week is about Getir, the Turkish grocery delivery platform which conquered Europe, but finds its empire rapidly shrinking nonetheless.Since June, Getir has exited the Spanish, French, Italian and Portuguese markets. The company announced on Tuesday [22 August] that they are cutting 2,500 jobs worldwide, about 10% of its workforce. This follows reports that Getir is having problems paying suppliers in the UK and Germany, having recently auctioned off equipment in the UK to raise cash.The Gig Economy Project carries two articles this week exploring the crisis of Getir. First, we have examined the dynamics of the company's rapid rise and sudden fall, and spoken to a member of the Getir Workers Collective in Berlin about how its workers have experienced this rollercoaster and what they can do now to defend their rights. Second, Lucas García Alcalde has written about the experience of Getir in Spain. Alcalde has reported on Spain's grocery delivery sector for the past two years for Business Insider Spain, the same length of time Getir operated in the Southern European country. He finds that the company never got close to living up to its promises to its riders nor anyone else.Here, we will restrict ourselves to just three observations: 1) Dominating an industry sector is not a sure-fire route to profits, if the unit economics don't stack up. Getir has either bought-out or out-lived almost all of its European competitors over the past three years. It had no direct rival left in France when it decided to close its operations there, despite having various competitors there two years earlier. But even with a virtual monopoly, the company only turns a profit in its native Turkey. The difficulty is that ultra-fast grocery delivery has high costs and low margins. If you want to deliver in 15 minutes, you have to employ a lot of drivers. You need to pay for the rent and electricity on the dark stores. You have a substantial amount of waste from perishable goods which aren't sold. And then you need to subtract those costs from the fact that a carton of milk or a bag of onions are really low-margin products, you maybe make 10% above the cost of supply at best. In restaurant food delivery, most of these problems do not exist: workers are usually paid-per-task, rather than per hour, there are no dark stores, the food is made-to-order so there's no waste, and the margins are much higher for a pizza or a curry. Add to that picture the regulatory challenges that the dark stores bring, and you have an industry sector that - once all that venture capital money has dried up - appears to struggle to stand on its own two-feet. The answer, of course, is to raise prices, but how much are customers willing to pay for a little bit of convenience?2) This still might not be the end of app-based grocery delivery. It's notable that not only are supermarkets (with much deeper pockets than start-up's) increasingly running their own grocery delivery operations, but Uber Eats has just moved into this space, despite the problems the grocery delivery specialists are having. The grocery delivery platforms which do survive may do so through developing strong partnerships with the supermarkets, as Flink has done in Germany, where the supermarket chain REWE is one of its major investors and (naturally) the supplier of its dark stores. We have spoken to one asset manager who's firm is invested in this market who told us he's convinced that the dark store model of grocery delivery has a future, even if it is primarily led by the supermarkets. Why? Because of the efficiency gains of organising products in warehouses with no customers in them, and because there are a segment of consumers who are still willing to pay-up for on-demand grocery delivery, despite the pressures of inflation on household budgets. Getir, he argued, has slipped because it tried to enter too many markets at once without sufficient capital to deliver, but that doesn't mean the model itself is a bust. Time will tell if this analysis holds up. 3) When we looked at a major study by the Foundation for European Progressive Studies (FEPS) and UNI Global Union on Q-Commerce in this newsletter in March, we highlighted the part of the report which stressed that the employment of grocery delivery riders and 'pickers' is not a golden ticket to decent working conditions. In fact, the report found that workers' in this sector struggle to access the rights they are entitled to and the problems they face "are not dissimilar to those seen across the broader platform and gig economies". The key policy response the authors' argued for was not new laws, but instead "the enforcement of existing regulation”.The claims which are now emerging of a sub-contractor not paying sick leave and a franchise owner removing workers' hours without making them officially redundant to avoid redundancy pay only reinforces the case for systematic government labour inspections and tough sanctions to enforce the law. As Ronnie from the Getir Workers' Collective put it: "We want the government to consider these companies as habitual offenders of workers’ rights."Ben Wray, Gig Economy Project co-ordinator
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Gig Economy news round-up |
- 200 RIDERS TAKE FRICHTI TO COURT IN FRANCE FOR "ILLEGAL WORK": Former riders at Frichti, a French grocery delivery platform which was bought by Getir at the end of 2022, is taking the company to court for "illegal and concealed work". The claim is a similar one as was brought against Deliveroo in France last year, and saw three of the company's former French directors criminally sanctioned. Frichti, which entered into receivership in May of this year, hired its quick-commerce riders on a self-employed basis, and their lawyer Kevin Mention, who also represented the Deliveroo riders, said that there is "multiple evidence that the status of auto-entrepreneur, which the Frichti deliverers are supposed to enjoy, is in fact artificial". The claim is also challenging Frichti over their hiring of many undocumented workers. Mention said he hoped the claim will open the door to the regularisation of the undocumented riders. Read more.
- FOODORA IN SWEDEN INCREASES TURNOVER TO MORE THAN €400 MILLION: Foodora, Sweden's largest food delivery platform, increased its turnover in 2022 to €414 million (4946 million Swedish Krona), an annual growth of 25%. Foodora, owned by German multinational Delivery Hero, launched in 22 Swedish cities in 2022, and now operates in 350 locations in total. The company made an operating profit of €6.3 million, it's largest to date, but it still made a loss on its bottom line, having made a €14 million pay-out to the parent company. "Despite the macroeconomic challenges we face, our results show our strength and adaptability," Hans Skruvfors, Foodora CEO, said. Foodora signed a collective bargaining agreement in 2021 with the transport workers' union, but it was criticised by some in the trade union movement because the Foodora riders which are hired via sub-contractors were excluded form the agreement. Read more here.
- ONLYFANS OWNER GETS $338 MILLION DIVIDEND: OnlyFans, an online platform most well-known for its use by sex workers, has paid out a huge dividend to its owner, Leonid Ravansky, after annual pre-tax profits reached $525 million. The $338 million to Ravansky comes as the London-registered platform saw its number of users rise to almost 240 million, up 27%. Over three million 'content creators' now work on the platform, up 47% in a year. Content creators keep 80% of user transactions on the platform, while the platform takes 20%. The platform has been criticised for not doing enough to prevent child sexual abuse material, and has also faced fraud and theft allegations from content creators and users. The UK Sex Workers' Union tweeted in response to Ravansky's dividend, "Does it make you angry that you can barely get support, the website frequently doesn’t work, and 20% of the profits of your hard work are going towards this?" Read more here.
- SPANISH SUPREME COURT REJECTS CABIFY'S CLAIM FOR €237.5 MILLION IN COMPENSATION: Spanish private hire (VTC) platform Cabify has been rebuffed by Spain's highest court in an attempt to get compensation for the Spanish Government's licensing regime under the 'Ábalos decree'. The decree, initiated in 2018 and including a four year transition period which expired last August, meant VTCs need a national and regional license to operate, something which Cabify deemed to be "expropriatory". The Supreme Court found that the decree did no harm and the four-year transition period meant there was no abrupt change for the platform. The ruling was made in July but has only been released to the press now. It follows a verdict by the Court of Justice of the European Union in June which found the double-licensing system is not in breach of EU regulations. The number of VTC licenses available is a topic of high controversy in Spain, with the CJEU ruling in June finding that the 1 to 30 ratio - 1 VTC license for every 30 taxi licenses - was arbitrary, and that regional authorities had to justify limits based on the environmental and planning needs of the region. Read more here.
- TURKISH MOTOR COURIER WORKERS ASSOCIATION TO LAUNCH: The Turkish Tourism, Entertainment and Service Workers Union (TEHİS) is launching a specific organisation for motor couriers. The Motor Courier Workers Association (MİD) was due to launch in Bağcılar on Tuesday [25 August], but was postponed due to "a technical problem", TEHİS announced on Twitter. MİD will aim to address the issues of all motorcouriers through collective struggle, under the slogan: "We drive alone, we walk together!” Turkey has a large food and grocery delivery platform sector, including the platforms Getir and Yemeksepeti (owned by German multinational Delivery Hero), and has seen significant strikes in recent years. TEHİS took action in July against "wage discrimination" at a Getir sub-contractor, Vigo. Read more here.
Have we missed something important? You can help keep us informed by sending us information to GEP@BraveNewEurope.com. |
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Lucas García Alcalde: There are lessons to learn from Getir’s Spanish exitFor the past two years, Lucas García Alcalde has been reporting on Spain’s grocery delivery sector for ‘Business Insider’. Following Getir’s exit from Spain in July just two years after its entry, Alcalde writes for the Gig Economy Project about the company’s short but eventful time in the Southern European country, and what lessons might be learnt for workers, industry and government. Puedes leer en Español aquí.
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- The 'Don't Gig Up, Never' project, coordinated by the Fondazione Giacomo Brodolini, has a final dissemination webinar on 30 August, 12 noon. Click here to register.- The WE-TRANSFORM project is hosting a conference in Turin, Italy on 'a policy agenda for workers transition in automated and digital transport services', 27-28 September. Click here for full details and to register. - WageIndicator is hosting an online conference on 'A Level Playing Field for Gig Workers', 27 October. Click here for full details and to register.Know of upcoming events we should be highlighting? Let us know at GEP@BraveNewEurope.com.
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The Gig Economy Project is a media network for gig workers and we welcome contributions from workers, writers, academics, activists - anyone who wants to stand up for workers' rights in the gig economy.
If you would like to write for the site, discuss arranging an interview with GEP, or simply have information about developments in the gig economy in Europe you think we should be aware of, get in touch.
Contact project co-ordinator Ben Wray at GEP@BraveNewEurope.com or send a direct message to the Twitter: @project_gig.
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