With outsourcing increasingly turning to crowdsourcing, it would seem tempting for startups to leave manpower intensive tasks to the crowd.
While ride sharing services Uber and GrabCar have become the most prominent proponents of the gig economy, delivery services have been doing the same for ages, depending on freelance dispatch boys.
Zoom CEO Jeevan Kumar said using full time staff gave them an edge in terms of consistency and quality, a necessity for B2B clients.
“Any job requires man power, Uber says they can scale infinitely with (free agent) drivers. But for delivery you’re at the mercy of the riders if they’re third party. If everyone goes on holiday and doesn’t turn on their app, you’re screwed,” he said.
Having riders vetted as full time employees also made them more accountable, translating to zero no cases of cargo going missing.
From a B2C perspective, Cooked CEO Joon Chan said riders were the only touch point between the company and its customers.
Without training on product handoff to answering queries, riders could accidentally sour the user experience at point of delivery.
Cooked also sets customer satisfaction as the primary measure for riders’ incentives, compared to how a freelancers focus on sheer number of deliveries to earn their bonuses, often at the cost of rushed customer interactions and dangerous driving.
Chan, formerly the managing director of Food Panda, said his experience with using outsourced riders for Food Panda taught him that outsourcing was just a staffing stopgap, but neither cheaper nor an avenue for developing staff over the long term.
(Foodpanda now uses its own riders).
Kumar noted that riders tend to freelance because they can’t find permanent jobs.
“They’re seen as unprofessional, with no pride in their job. But riders do aspire: they look up to those working with DHL or TNT who get apps, uniforms and training,” he said.
By providing that, Zoom achieved 85% rider retention, with the 15% that left due to being dismissed over disciplinary issues. Cooked recorded similar numbers, with 80% retention and the 20% exit due to terminations.
Kumar said job security and full time pay improved their employees’ quality of life – providing stability and helping them take loans – while ensuring their loyalty and reducing employee turnover.
Chan added that companies shouldn’t depend on monetary benefits to convince employees to stay, as those employees would easily be poached by better paying competitors.
“People work not just for the money, but also happiness. I make sure the riders see they have a future with us. They see we respect them and have their backs, we provide healthcare coverage and less stressful delivery schedules to free lunches,” he said.
Zoom had 55 riders, while Cooked had 16 so far.
Asked if having full time staff and the consequential higher overhead was unsexy for a startup, Kumar disagreed, saying the question became how do optimise the riders’ deliveries to cover their cost.
Both companies used proprietary delivery management systems to maximise the deliveries per rider.
Kumar admits that though his employment strategy was largely tied to the unique demands of his industry, but ultimately full time staffing was something other startups would have to consider when it came to their core functions.