alt Hacker NewsAm I on the wrong side of perspective? I imagine of these companies are at big risk in a turn down with low margin - competitive space. The model is a tough one to work
Merging reduces platform inefficiencies and drivers can work both situation.
I am actually amazed both companies are alive and making a profit.
Replies
> Merging reduces platform inefficiencies
None of the money saved by reducing inefficiencies will lower prices for consumers or increase pay for drivers. The goal is always to charge customers the most while giving them the least, while paying employees as little as they can get away with. In theory merging also kills off competition that might steal customers and workers by offering better prices/wages, although in practice companies share the same goal of screwing over both consumers and workers and are perfectly willing to resort to collusion in order to do that most efficiently.
> Merging reduces platform inefficiencies
This was literally why Rockefeller was a big proponent of the monopoly. Unfortunately exploitation is the tradeoff that is enables
Profit? Who cares about profit today in tech? It's tomorrow's profit that matters. Whenever that is.
why do you think this is a low margin business? The big expense is software labor and local administrative compliance.
Outside of that, this is ultimately two services where a middleman takes a decent cut while their delivery label is compensated entirely by the customer. Once the model is established and locked-in, this should theoreically be a very easy business to maintain.
From a driver persepctive:
DD plays big games with pay, sometimes hides tips, drives down base pay, and stacks orders with good pay and bad pay offers to try and pay drivers as little money as possible.
In a bad economy, there's less people ordering on DD (although higher income earners who aren't as effective by economic effects don't change habits), however, it drives MORE desperate drivers to the platform that accept the low pay orders since they no longer have an income. This drives down all wages for drivers, and costs, which in turn pads DD's margins.
We actually see this seasonally in the summer when more students and teachers join the platform over the break. There's a glut of drivers, you can't cherry pick higher paying orders and most stuff that's left to fight for is low paying, no tip orders. When school starts back up things return to normal.
This is why DD is trying to sign up as many drivers as possible. If you remove the scarcity of drivers, then every low paying gig will eventually get picked up, driving average pay down and you can ratchet down your base pay hoping customer tips make up the slack.