Contxto – If you’re one of those (weird) people that do not read terms and conditions for fun turn away now!
There’s something you might want to know about your last-mile delivery choices.
According to recent reports, Argentina’s Undersecretariat of Actions for Customer Defense called out Rappi, Glovo and PedidosYa for supposedly abusive and unconstitutional practices within their platforms’ terms of use.
While the government’s fines could reach up to AR$5 million (around US$72,560), I believe user’s disappointment could wreak much more painful damage in the form of forgone purchases.
When user goodwill and reputation tumbles, your business can fall as fast as it was built.
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Between the lines
But, what are the main issues anyways?
Well, Rappi and Glovo, for instance, aim to distance themselves from their responsibilities by making the consumer the official employer.
They do so by claiming that whenever the user makes a purchase, it is in fact the customer, not the platform, who is hiring a delivery worker. This practice is commonly known as a mandate contract and needless to say, it is controversial.
Glovo is a different case. The company explicitly separates itself from the service but it also aims to abandon the users’ right to return products if they aren’t satisfied with the purchase. Bear in mind that this is for non-perishable products only.
PedidosYa, on the other hand, is explicitly saying that “the firm disclaims responsibility for any error [in the delivery of a product] and reserves its right to unsubscribe or reject users without further explanation”. The company’s terms and conditions make reference to other instruments, but it does not specify what they are.
Rappi for consumers, Rappi for entrepreneurs
As a founder, Rappi is certainly the type of company many of us aspire to reach.
As a consumer, the contrast is clear. User complaints about the platform aren’t really new.
Strong in user acquisition by subsidizing new users with promotions and trying to retain with coupons, last-mile delivery companies nevertheless tends to upset customers post-purchase.
Perhaps, if those proceeds were to be used to retain users through improved customer service, they wouldn’t need to invest so heavily on acquiring new ones. But, with such a saturated market why is this not always occurring?
Perhaps, there is not need, since enough customers stay to use their faulty product. It may well be that companies, like Rappi, are actually providing an essential service uncatered for in the market, making people settle for bad service over no service.
Market failure in last-mile delivery?
But this retention of an unpolished service speaks more deeply to the economics behind last-mile delivery. It begs the question: Can a better startup compete with Rappi, Glovo, and PedidosYa, and beat them by providing better customer service?
Or, (and this seems like it is the real answer given the saturation and tiny margins of last-mile delivery), is the last-mile business model as it stands actually destined to become crappy as companies scale?
Perhaps the industry is in need of a deep disruption we cannot even imagine yet with technology still in development.
Robot couriers come to mind… I’m looking at you Kiwibot.
Related articles: Tech and startups from Argentina!
-VC
