Comment by Traster
6 years ago
This is like the iPhone SE conversation - there was always a big group of people who would tell you that the reason they buy the iPhone SE is because it's the smallest iPhone. But its very clear that the company making iPhones is certain that people buy the iPhone SE because it's cheap.
It's the same here. Everyone will always tell you that these knew gig economy companies are so much better! Their service is better, they're quicker, you don't have to deal with people, you can order whenever you want etc. etc. But actually, it's probably going to turn out it's just cheap.
It's very likely these services are basically used by 90% of people because they're cheap, and they're cheap because they're losing money to gain market share. The problem is that once they need to turn a profit, they have to drive up margins and now that $16 pizza needs processing fees and costs for the delivery driver - now it's $22. Or more importantly, your $8 starbucks order is now $13. So the second that the prices reflect the true costs these businesses are going to shed customers like you wouldn't believe. Oh and in order to try and curb those costs you're going to see some guy in a broken down car do a tour of the city delivering everyone else's food before yours gets to you.
I think you're both right, there are two separate types of customers making the same choice. One group is more price-conscious, the other is more effort-conscious. I'm personally in the other group - I have less time and patience than money to spend on deliveries, so I'll pick an option based on seamlessness. E.g. I've been ordering food for years on aggregator websites instead of calling the restaurants, because this way I can input my order on a computer (vs. talking to a busy person in a noisy room over crappy cellular connection, which often enough ends in errors), and I can prepay the order. I don't carry much cash on me, and I don't enjoy the hassle of using it. And while some restaurants will allow paying by card on recepit, it usually involves one or two payment terminals shared between a bunch of drivers, which leads to longer delivery times and all sorts of other problems (I've had drivers forget or not be informed about the need to take a terminal with them). I'll gladly accept 10-20% higher price to avoid dealing with any of that.
It's a similar story for rideshares; I think the major benefit they offer over regular taxi is seamless payment that (almost) always works, and is always available.
People here (UK) use these apps even though they're more expensive than when the restaurant handles the delivery. I never paid for a delivery in my life before Deliveroo/UE, but the user experience is so much better with them that it's hard not to.
For example, it's a little bit confusing how to find my place, so something as simple as not having to explain it every time I call up (and inevitably have it transcribed incorrectly) makes a huge difference in friction.
I'm happy to pay delivery fees to the restaurant. I'm less happy to pay fees to drive returns for growth-obsessed venture funds.