UberEATS is the smartphone food delivery app that has become famous across the world, especially for millennials in Australia.
But, recently, the company running the app, Uber, has decided to change how it pays its couriers. But look at any courier company, whether the local or Australian international couriers, couriers brave the conditions people don’t want to; traffic, bad weather, long travel times, etc., all to deliver their packages, in this case, freshly cooked meals. The changes Uber is implementing with regards to fewer couriers deciding to work for them, which will lead to longer wait times and fewer food options for customers as couriers leave Uber for more work with more potential for profit.
In reality, UberEATS’s couriers aren’t company employees, they’re contractors. Instead of earning salary, they are instead paid with a contract fee proportional to the number of deliveries they successfully made. The company uses the term, “delivery partners” for them.
Until recent changes took effect, these “delivery partners” were being paid $11 for every delivery, with an additional $2 for every kilometre covered, with some variation on the fee based on location, resulting in a minimum gross pay of $13.50 per delivery. The gross term is an important distinction. Uber charges a service fee on what their courier earn wherein they take a cut of the profit, about 35% for bicycle based couriers, less for car- or scooter-based couriers. This means that, in truth, that courier being paid $13.50 only gets paid $8.78, more or less.
The recent change will cut in further on that profit. The changes introduced will result in couriers’ minimum gross pay going down from $13.50 to $11.20 (that’s a $2.30 reduction), and that’s without taking into consideration Uber’s slice. The changes will lead to Uber losing less money on pickup fees (about $10 per order), which will no doubt be good for the company.
However, if the people they task with delivering the food to their customers decide to not do so anymore, any saving the company might have made will be undercut. Reactions to the change have been decidedly negative with numerous couriers considering quitting. If this follows, UberEATS’ customers will face longer wait times. Time will tell what this will entail for the company and its competitors.
With the courier business being as difficult as it is, the reactions to these cuts are perhaps not unreasonable. Still, with reactions to this, and similar changes made to Uber Canada, the competition, like Deliveroo, which uses a business model like actual courier companies like Australian international couriers, wherein couriers are assigned certain zones at certain times, might make a resurgence.