Negative feedback about food delivery companies seems to be full of the internet.
A quick look at the Facebook pages of the food delivery platform will reveal furious emojis and a plethora of comments from users complaining about late, cold and missing food; and these complaints appear to have increased in recent months.
Wilron Loh said he ordered noodles from the WhyQ juice delivery platform last week. He waited for an hour, but his order was not delivered in the end. He called the experience “the worst delivery ever.”
Meanwhile, foodpande user Brandon S said his payment was declined when he ordered food, so he had to resort to lunch elsewhere. Alas, his card was charged and he ended up paying for two lunches that day.
The food delivery giant GrabFood is not spared the heat either.
Dissatisfied user Irvin Ng said that he was “extremely disappointed” with GrabFood after his points were converted into a voucher after a canceled food order. He was appalled because he could not use the points to buy food from other traders.
Another GrabFood user, Kylie L, said it took more than two hours to investigate her missing accounts.
The intensified warning for Phase 2, which has just ended, has once again exposed the infrastructural problems of the food delivery industry.
Last year during the switch, jumps and orders were also jumps in search of food not delivered on time. Firms and experts then attributed these problems to a relatively new industry and the sudden emergence of Covid-19, a period when food delivery companies did not have enough time to adjust quickly.
However, it has been more than a year since Covid-19 happened. Even when time is on their side, delivery problems still exist.
Why are complaints common?
“(Customer service) doesn’t matter as long as (technology firms) don’t have a problem with the service, and then it becomes a deciding factor in whether a customer might decide to mine a problem on social media,” says Walter Theseira, associate professor and startup expert at Singapore University of Social Sciences (SUSS).
He added that the reason the internet is spreading with complaints about poor food delivery services is that the industry is cheap to enter but expensive to maintain quality service.
It is also expensive to build efficient infrastructure due to high operating costs and growth.
So it’s about resources, but it’s not just customer service in terms of hiring people to file complaints, but also investing in operations.
It’s pretty cheap to set up a website, find some people to start delivering food, and sign up for some F&B partners. The high operating costs are that if you do it well, especially when you expand beyond a narrow niche or geographic area, it becomes very expensive.
– Professor Walter Theseira from SUSS
Also, the food delivery model that usually hires “drivers on demand” makes it easier for standards to go wrong.
“If you rely solely on an on-demand delivery team, which is only paid when it has an execution order, you will really run into problems when you have unexpected (or even expected) surges in demand,” Mr. Theseira explained.
In order to improve their capabilities and reduce bad feedback, Dr. Clive Choo, a lecturer at Nanyang Technological University (NTU) Business School, says food delivery companies should invest in good developers and software vendors.
“It will help them to continuously improve their routing algorithm. Marketers may need to study the needs of a certain proximity and work with caterers accordingly, ”he adds.
Why are prices rising despite fierce competition?
Buyers of food delivery Vulcan Post spoke by saying that food prices and delivery are rising on some platforms.
When the media tried to order two cups of tea from the bubbles of renowned brands from the White Sands Mall to the Pasir Ris HDB block, which is 1.4 km away, a check on different food delivery platforms revealed inconsistent delivery rates.
It costs only 4 to 6 US dollars for one application just to deliver a drink. This is equivalent to the price of an extra cup of bubble tea. In two other applications, shipping costs range from $ 1.90 to $ 2.50.
Experts attribute higher fees to delivering the demand and supply of drivers of each platform. The situation of work at home also means that there is more demand for food delivery in the hearts.
One expert says higher fees could also be a reflection of better numbers supporting firm listing plans.
“Food delivery applications are under increasing pressure to improve margins, especially as several are now public corporations or intend to go public soon,” says Mr. Theseira.
As for higher food prices, dr. Choo says it could be that food suppliers make a profit from food delivery companies. “Another way of looking at this is that food delivery companies are not willing to take on this cost,” he suggests.
The Singapore government provided a short-term relief for F&B catering facilities for Phase 2 HA, funding a five percentage point commission charged by Deliveroo, foodpanda and GrabFood.
The usual commission fee is 30 percent of the total food order.
Experts say that as more people get vaccinated and the state recovers from Covid-19, delivery companies may need to consider adjusting their commissions to retain both buyers and food suppliers.
“There is significant evidence that logistics companies – which are part of what food delivery offers – have significant economies of scale … I guess the market will tend to a small number of big players, with possible niche platforms with a certain specialty that also exist,” says Mr Teseira.
Be careful where you park your money
Covid-19 led to the emergence of new food delivery companies.
In March, AirAsia has launched its food delivery service in Singapore, hanging free shipping promotions to attract customers.
At the time, the group said it had more than 500 drivers and about 300 food operators. It also claims to offer lower commissions compared to competitors.
As much as these newcomers provide alternatives and diversity, experts say consumers and retailers should be more careful with less established service providers in this space, especially if the company’s business model wants to be an intermediary and hold cash during the transaction.
“You really need to assess the credibility of the platform or the merchant. It is extremely difficult to recoup small losses or refunds if services are not provided, unless the platform voluntarily offers such a refund, ”says Mr. Teseira.
It may take much longer to use for new startups, unless there are ongoing means to achieve economies of scale that support its business and application development such as an efficient routing algorithm and last-mile delivery routes, says Dr. Choo.
He adds that customers could retain ‘stored value’ or the prepaid amount when the food delivery company cancels.
I do not advise consumers to go to food delivery companies that use subscription or subscribed business models. (You should pay while using them.
– Dr. Clive Choo from NTU Business School
If payments are made by credit card, there is some possibility of canceling the charge, but other types of payments are unlikely to be refunded at a reasonable cost in the event of a business failure or default, experts add.
“I don’t think most startups enter the industry with the intent to deceive customers, and offering loss-making services is a well-established method of gaining market share upon entry. The fact is that it is cheap to enter this industry, but it is expensive to master and not all startups will be able to maintain their business or provide appropriate services, ”says Mr. Theseira.
Long-term concerns for the food delivery industry
Despite many problems with structural growth, food delivery services will remain, experts note.
U survey conducted in January this year, 80 percent of respondents admitted to ordering food delivery services more than ever before, and half said they order food more than once a week.
Older Singaporeans are also adopting food delivery platforms. 81 percent of respondents aged 45 to 54 said they rely more on food delivery services to order their meals.
Because they prefer food to be delivered to their doorstep, the platform is focused on improving their services.
Mr. Theseira suggests that food delivery companies consider a cost model when hiring drivers to ensure quality delivery.
“I’d say food delivery services would like to have as much control over drivers as possible, so they can provide predictable services, but they don’t want to pay the cost of hiring drivers.”
“Delivery staff are encouraged to complete deliveries as quickly as possible, which means a certain risk of recklessness,” Mr. Teseira says.
On the issue of the labor market around the group economy as a whole, Mr. Theseira notes that increased regulation and protection of the labor market is likely to significantly increase costs.
He says that there were no major problems for public health, since the short period of time between food preparation and delivery does not really pose a big risk, and the restaurant usually closes the food.
Regardless, platforms must have high food hygiene standards or perhaps introduce food safety courses to help workers better understand the requirements. Or be prepared to face a bad press, if anything unfortunate happens.
“There is always a concern that mistreatment and the like could lead to food safety risks,” he says.
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