When On-Demand Delivery Cuts Corners

What’s the biggest obstacle facing the on-demand delivery economy? Some might say it’s a legal issue of how to pay workers enough without sacrificing innovation and growth. Others might point to ever-growing logistics costs in the face of similarly increasing consumer expectations on when they deserve their deliveries.

However, what if the lack of control and oversight the industry has over its nebulously categorized workers might instead pose the biggest threat to the on-demand economy’s explosive growth?

Caixin Online has the story of the hot water that one on-demand courier service in China, by the name of Ele.me, suddenly finds itself in. According to an annual consumer protection investigative program aired on China’s CCTV, drivers for Ele.me were seen picking orders up from unlicensed and unsanitary kitchens that were not up to safety regulations. Moreover, it appears that Ele.me might have gone out of its way to hide these practices. The show also uncovered that the company’s website lists incorrect addresses for many of the unclean restaurants it witnessed its drivers making pickups from. If that wasn’t enough proof that something shady has been going on at Ele.me for some time, drivers had also been dropping off menus and business cards from the supposed “restaurants” they ordered from — though these also contained incorrect contact information and falsified addresses.

The investigative TV program, which aired Tuesday (March 15), caused the CEO of Ele.me, Zhang Xuhao, to appear on CCTV a few days later with a formal apology for the country and his customers. It wasn’t just his company who ended up with contaminated egg on its face, though; Alibaba and Tencent both hold investor stakes in Ele.me.

While Western consumers might like to think that they live in a more law-and-order business environment than one that would allow Ele.me to pull these tricks, the fact of the matter is that the widening scope of the sharing economy and last-mile courier services means more uncertainty is part of the game. Especially as pure eCommerce companies look for ways to boost their profit margins — or even to get themselves profitable in the first place after years of coasting on nothing but revenue — anything they can do on either side of the legal line may soon become a sound business decision.

Companies making big bucks off the sharing economy don’t even necessarily have to commit direct wrongs in order to create dangerous or unsafe situations; sometimes, the failure to act can lead to the same result. Look no further than Uber, the poster boy of the sharing economy, and its ongoing public relations fiasco surrounding the Kalamazoo, Michigan shooter. The Atlanta Journal-Constitution reported that when officials for the Hartsfield-Jackson International Airport floated plans to require fingerprint registration and background checks before Uber drivers would be allowed to pick up passengers at one of the world’s busiest airports, the ride-share company pushed back with a vengeance.

“If this framework were to be implemented, it will be impossible for Uber to [operate at the airport],” an Uber spokesperson told AJC, citing lax restrictions at other airports around the country.

The proposal “would raise substantial barriers to the Uber driver partners” and is “out of step with the dozens of airports across the country that have welcomed ride-sharing,” the spokesperson said.

The fact Uber is pushing back at airports, the new untouchable ground in the U.S.’s conversation on security versus liberty, could indicate what an important fight the sharing economy sees in resisting what it perceives to be overzealous regulations. While Uber, Ele.me and others may quibble over the public safety benefits of increasingly strict policies, how long until public trust erodes and their word doesn’t matter anymore?