On-demand: The gig economy’s broken premise.
By: Joel Shapiro
Tags: Business Owner, Gig Economy, Entrepreneurship, On Demand

The first wave of gig economy marketplaces came bearing hefty promises: get autonomy, make a good living, set your own schedule. In the shadow of the 2008 financial crisis, these promises incited thousands of people to take a chance on a new way to work. As on-demand became the rallying cry guaranteeing consumers better living through technology, these workers quickly became the primary engine making the flywheels move in gig marketplaces that wanted to drive for you, shop for you, and bring your dinner at the push of a button. These same workers soon become the replaceable, exploitable cogs in a model built in the service of on-demand.

The COVID-19 crisis has exposed this central flaw of the gig economy, particularly in the realm of grocery delivery. As home grocery delivery surged during the height of the pandemic, the workers absorbing the risk and assuming the additional burden were called “frontline heroes” but left fighting for table scraps and PPE. While policy makers put forth legislation requiring hazard pay and announced a congressional inquiry into the practice of tip baiting, on-demand apps like Instacart watched their valuations climb through the roof as strikes broke out for safe working conditions, fair pay, and sick leave policies. Meanwhile, more than 60 million people filed for unemployment. Many of whom, desperate for cash and eager to work, will become prime targets for gig economy recruitment. And with a clearly demonstrated public appetite for grocery delivery, many will find themselves locked within the ranks of shoppers fueling one of the leading on-demand grocery apps.

The high cost of on-demand.

Consider what it takes to deploy a human to gather and deliver your groceries in real-time. First, you need an army of people at the ready. Then you need to prioritize the ones that are closest and available. Finally, you need to incentivize them to move quickly. It’s a simple enough product problem that has been solved with powerful algorithms, illusory performance bonuses, punitive review systems, and incessant, big-brother style app alerts. Now consider the human experience behind on-demand. That standing army of “supply” is motivated by the dangling carrots of reasonable pay and quantity targets. Customer service takes a back seat to how fast they can accept the order and become available for the next one. In lieu of autonomy over their work they get an app that tells them what to do, how to do it, and to hurry up and do it faster.

Human capital within this model starts to look like a means to an end — a necessary friction on the path to automated delivery. A casual observer can be forgiven for wondering how services that depend entirely on the labor of shoppers can continue to treat them as an incidental concern. If this race to the bottom is just the cost of on-demand, it begs the question — who’s actually demanding on-demand? How much of the “instant” grocery expectation has been cultivated by the apps themselves?

On-demand is a broken premise that launched a thousand broken promises. Promises made to the workers, who can never catch up with the carrots. Promises made to grocery partners, who worry their customers are becoming more loyal to delivery apps. And promises made to consumers, whose dollars are fueling a model that prioritizes speed over quality of experience. These broken promises make clear that a new model is necessary — one centered around business ownership. This shift in focus delivers a far superior customer experience and creates a clear path to entrepreneurship for anyone who wants it.

It’s time to center ownership.

Consider the impact of Shopify on ecommerce — their model centers the entrepreneur by providing an all-in-one solution for any individual who wants to build an online business. In turn, these shop owners service their customers, grow their businesses, and reap the rewards of their efforts. Applying this model to the gig economy can actually fulfill that elusive promise of autonomy. When the technology that powers on-demand marketplaces is available to anyone, business owners can set their own prices, schedules, and policies.

An ownership-centered model can also reach beyond tech to include a comprehensive ecosystem of support that includes things like educational content, dedicated coaching, and access to a community of emerging business owners. This model goes beyond enabling people to accept gigs — it empowers people to start, run, and grow their own businesses. Far from the economic bandaid offered by on-demand models, ownership offers a path to financial stability and wealth building.

When applied to grocery delivery specifically, this model also delivers a far superior customer experience. They get an increased level of service from someone they know and trust, they get to avoid paying the grocery mark-ups commonly added by major grocery apps, and they get to schedule their deliveries around their lives (opting for on-demand only when needed). They get the flexibility to shop local bakeries, butcher shops, and specialty stores alongside grocery chains. And they get to feel good about shifting their spend to a local small business owner instead of an out-of-town algorithm. This model keeps local dollars local — in the wallets of thriving small businesses and the tills of neighborhood stores.

Replacing the faulty on-demand premise of the gig economy with an ownership model offers better outcomes for everyone involved — the workers, the customers, and the communities they live in. The reason is simple. If you’re not trying to optimize for on-demand, you can actually optimize for the people.