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After riding high and fast on a pandemic-induced wave of consumer demand and billions in venture capital investment, rapid delivery apps appear to have hit the buffers. Downloads dived in 2022. In the UK, a prime market, monthly user sessions for market leader Getir plummeted from more than half a million at the end of March to a little over 100,000 by June of the same year.
Globally, jobs have been cut and less profitable warehouses closed as apps try to reduce spending and restore investor confidence. Share prices have plunged for other delivery operators, like Uber and Lyft, and for fast food couriers Just Eat Takeaway and Deliveroo. Uber claims there's light at the end of the tunnel in terms of its global driver supply, up 70 per cent year on year since the pandemic slump, allowing it to focus on reducing cancellations and waiting times.
But as the cost of living crisis bites, will households abandon the so-called servant economy, which promises doorstep deliveries in minutes? A US tech research university survey in February 2022 of people who used online deliveries during the pandemic suggested that more than 90 per cent would revert back to their old ways of shopping. And of 2,000 UK consumers surveyed in March, 82 per cent said they intended to cut back on non-essential spending. And for 61 per cent, that meant curbing fast food orders.
Prominent apps like Getir, Just Eat Takeaway, and DoorDash have moved to consolidate, buying or seeking to buy rivals to upscale output and drive down costs. Delivery companies could also trim their losses by extending waiting times, selling their own brands, and driving up order sizes by introducing more expensive or luxury items to their inventories.
Cutting salaries will be difficult at a time when unemployment in many countries is low, giving gig workers more options. And regulators in regions like the EU are also looking at awarding gig contractors full-time pay and benefits. Apps could hike prices, but that risks denting demand even further as households cut back on discretionary spending.
Some may need to overhaul their businesses altogether. According to critics, many rapid delivery apps weren't profitable to begin with, unable to recoup the high costs of the labour, floor space, and fuel required to get groceries to a customer within 30 minutes. Either way, delivery apps will have to adapt fast to the increasing cost of convenience.