The competition between online services across segments such as e-commerce, food delivery, among others seems to be playing out on the streets, quite literally. A report in Economic Times states that food delivery majors such as Swiggy and Zomato are attracting delivery executive with high payouts, which is impacting e-commerce players such as Flipkart and Amazon.
In a bid to attract delivery executives and keep them on the platform, ET reports that food delivery companies are offering high salaries with incentives. As a result, these delivery executives are earning as high as Rs 40,000-Rs 50,000 as against the Rs 18,000 to Rs 20,000 that they earned previously.
It is reported that the corresponding figure for the last-mile delivery staff attached to online retailers like Flipkart would not be earning more than say Rs 18,000 a month. This is definitely having an effect on them and they are moving to the food delivery business.
While none of the companies mentioned above have reacted officially to the issue at hand but agencies which help in recruiting the delivery staff for different verticals confirm such a phenomenon is indeed currently taking place.
In addition, Zomato and Swiggy are not only increasing the payments to the delivery staff already working for them but are also increasing the head count.
Swiggy has almost doubled its feet on street from 30,000 to 55,000 while Zomato‚Äôs figure for the same at around 50,000 which is almost 3 times the headcount it had just 6 months ago.
It has an in-house delivery unit Runnr that it acquired last year. The ET report also indicates that swiggy is looking to further double the number to 100,000 delivery executives by the end of this year or by the first quarter of 2019.
The third player in the scene, Foodpanda, now a subsidiary of Ola, is also equally aggressive with its target showing 25,000 delivery executives against 10,000 now. Foodpanda delivery boys make around Rs 25,000, the report states.
These steep increases have resulted in many working for e-commerce companies shifting their loyalties to the food order deliveries.
Zomato and Swiggy offer fixed pay plus incentives and hourly and per delivery fees. Not all companies follow the same pattern, however. Moreover, the pay-out pattern changes with cities with some key locations seeing peak levels of compensation to delivery executives while in other cities it is more on level. Competition within the industry might also be a reason for this. One aspect seems to be clear the orders and the overall business levels for these food order companies is moving north quite rapidly.
Some observers see a parallel between this situation and the one obtained in 2014-15 when the ride share taxi services like Uber and Ola hit the markets for the first time and it was reported that some drivers were pocketing astronomical sums each month compared to what they were used to earning prior to that. Figures like Rs 100,000 per month were quoted then. Some experts however feel these high pay-outs in the food order delivery business may even out after some time.