This is the greatest challenge to the future of Singapore’s gig economy, according to a Foodpanda exec

Luc Andreani, managing director of food delivery service Foodpanda Singapore.
The Straits Times

A lacking gig economy is no doubt troubling to marketplace e-commerce platforms in Singapore.

As managing director of Foodpanda Singapore Luc Andreani puts it, businesses which require flexible work schedules “simply cannot exist without the gig economy”.

And as these businesses grow and demand for their services increases, so does the need for workers in the gig economy.

The German brand, which has been operating in Singapore since 2012, was the first food delivery tech company to launch here, and despite stiff competition, managed to achieve quadruple growth last year.

Mr Andreani admits that the greatest challenge to Foodpanda’s expansion in Singapore is delivery rider fleet expansion.

“The demand for freelance riders is greater than ever, especially with the launch of companies such as Amazon Prime Now.

“With stringent work pass regulations in Singapore, we only have a finite supply of riders. I see this as the greatest challenge for the future of the gig economy,” Mr Andreani tells Business Insider in an e-mail interview.

Attracting freelancers effectively

Part of solving the crunch on part-time or freelance workers is dependent on a company’s ability to engage workers in the gig economy in an efficient and effective manner.

Mr Andreani tells us that this is where Foodpanda thinks it can stand out.

Instead of a pay-per-order salary scheme which does not guarantee a delivery worker’s earnings, the food delivery company has chosen to pay its 2,500 freelance riders an hourly fee, plus an additional fee of $3.50 to $5.50 per order.

On why the company chooses to pay delivery riders a fee on top of their hourly pay, Mr Andreani says: “By paying our riders fairly, we are able to build a fleet that we can rely on and guarantee customer satisfaction, which is our ultimate goal.”

Resolving inefficiency as early as possible

E-commerce startups which have yet to find their footing will find that they need to make a great deal of initial & sustained investment in various aspects such as delivery and marketing to build their businesses.

This often results in operational cost cuts, especially when a start-up’s profitability and sustainability are questioned by investors.

When Foodpanda was launched in Singapore in 2012, it connected riders with vendors by manually working out which rider was nearest to a restaurant at a given time.

Realising its inefficiency, the company then acquired Hurrier, a dispatch algorithm tool which tracks riders’ whereabouts so it can calculate which rider can deliver an order most efficiently.

The technology also tells Foodpanda how many riders it needs on the roads at different times, and as a result, helps to eliminate the problem of having too few or too many riders on the road at any one time.

In the same way, what startups can do, Mr Andreani says, is to “aim at high efficiency, in particular in logistics & marketing”.

“Rather than showering consumers with unsustainable discount codes and deals, or overburning by maintaining a low-efficiency logistics setup (which are all great & easy for short-term gains), successful companies (are able to) not compromise on customer experience, while building a high efficiency setup,” he adds.