How the Cooperative Deliveroo Alternative Could Help Strengthen the Wider Co-op Economy
cross-posted from Mutual Interest Media
Deliveroo is famous for bright blue bags and worker exploitation. The company has fought hard to stop their workers unionising while paying wages that can dip to as low as £2 per hour according to the IWGB, a union attempting to organise riders and other workers in the gig economy.
Wings is a new worker cooperative alternative to Deliveroo, boasting superior ethical credentials. Unlike Deliveroo, Wings have committed to paying London Living Wage, currently £10.85 and provides their workers the right to sick pay and other benefits. Additionally, all deliveries use zero-emission transport, usually bikes, many of which are electric. The venture has branded itself as “good for riders, good for the environment and good for society”. Most critically, workers have a say and a stake in the business, with the profits distributed to the workers who also govern the enterprise democratically with all workers having one vote in the decision making process.
The venture has sprung from a spontaneous expression of mutual aid during the pandemic, when an informal collective of delivery riders and organisers came together to fight food insecurity during the first lockdown in 2020. They mobilised a network of over 100 volunteer riders to deliver free food parcels, which was a foundation from which Wings has emerged.
Wings, however, is far more than another cooperative trying to take on an ethically questionable corporate giant. It’s part of CoopCycle, a federation of worker owned courier platforms spanning across 63 cities, that is itself democratically governed by the member co-ops. The member co-ops use and develop shared software, which is licensed so that only co-ops can use it. It also received expert advice and a small amount of funding from the UnFound accelerator, operated by Cooperatives UK alongside a modest grant from the Islington council who recognised the cooperative’s potential to boost the local community and economy.
While delivery riders struggle due to Deliveroo, many restaurants also feel exploited by the tech giant who use their large market share and companies’ new reliance on these platforms to charge high commissions. Deliveroo charges an average of 20-25% commission on every order, yet restaurants have no choice but to remain on the platform because that is where the customers now are. Worse still, Deliveroo harvests and controls all the data giving them knowledge on our eating habits and would give them a substantial advantage over individual restaurants in the chase for customers even if more decided to go it alone.
Due to the network effects, where restaurants and customers are attracted to the platform with most restaurants and customers, making the industry vulnerable to monopolisation, many restaurants feel threatened that this sort of rent seeking might increase in the future. While this is frustrating, perhaps even a worrying trend is the creation of “dark kitchens”. These are kitchens owned by Deliveroo and others that produce cheap fast food. The fear is they may come to replace independent restaurants if Deliveroo continues to grow.
Courier owned cooperatives, like Wings, could provide a solution to this problem by altering their ownership structure to become a “multi-stakeholder cooperative”, with both workers and restaurants having a stake and a say in the business. Even if such a platform would gain monopolistic market power, it would have little incentive to start monopolistic exploitation of the restaurants, as the restaurants themselves would be part-owners of the platform. This would help foster community-owned infrastructure that would guarantee good working conditions for riders and fight off Deliveroo’s poisonous impact on the restaurants.
Historically, cooperatives have been used successfully to fix monopolistic and monopsonistic (a sort of reverse monopoly where there is only one buyer) markets. This helps explain why the ownership model is common among rural electricity providers in the US – when there is only one electricity company, one way to ensure it does not exploit consumers by charging them high fees to maximise its profits is to make the consumer own the company and have it distribute its profits to them. Conversely, half of the largest dairy companies in the world are farmer owned co-ops, due to prevalence of monopsonies in the dairy industry. Due to the “winner takes it all” tendency that is inherent in large parts of the platform and digital economy, cooperatives provide a proven model to make these areas of the economy more fair and effective.
Despite its brilliant potential, Wings, and other courier coops face an uphill struggle in a very competitive market. Deliveroo, despite being described by the Chancellor as “British Tech success”, has never made a profit. Instead, like many large tech platforms, it burns through investor cash to stay solvent. Deliveroo made a £225m loss last year and had to acquire £1bn in new investment to stave off bankruptcy.
However, courier coops can compete. In high-density cities, Wings believes the model can be profitable, although its founder Rich Mason expressed concerns that larger market rivals may try to bury the company out of fear of the potential of its operating model.
One source of strength for Wings could be closer cooperation with the wider cooperative economy. “Subscription box” services have seen a boom in recent years – ranging from food to shaving products, it’s becoming more common for consumers to buy goods through automatically renewing orders instead of having to actively shop for them. Perhaps we could see a future where worker owned courier co-ops like Wings deliver boxes of essential goods sourced from co-ops – with coffee and tea from Revolver World, a UK based co-op online store that sources its products from farmer owned co-ops in the developing world, milk from the farmer owned Arla Foods co-op, etc. Perhaps the 4 million members strong Co-op Group could procure at least some of its delivery services to Wings?
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