Delivery startups detect symptoms of unemployment due to coronavirus
Delivery startups detect symptoms of unemployment due to coronavirus

Delivery startups detect symptoms of unemployment due to coronavirus

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Contxto – The HR department at Brazilian iFood’s offices must be very busy lately. No, not making deliveries mind you. Rather receiving and shuffling through thousands of job applications for delivery workers.

According to a report by Reuters, iFood saw a rise in job applicants to operate as deliverers. The unicorn disclosed that in February it received 85,000 and in March it rose to 175,000 people hoping to don its famous red-colored backpack.

Coronavirus + quarantine = more deliveries

Unlike Rappi, iFood has yet to disclose whether it’s seen an increase in deliveries due to the coronavirus (Covid-19) pandemic. But, statements made by Diego Barreto, iFood’s Chief Financial Officer (CFO) suggest it’s experiencing something similar.

“Demand has been quite intense and customers’ behavior is changing across all categories,” said the executive.

In terms of “customer behavior”, Barreto is referring to consumers seeking to buy more cleaning products as well as basic staples like rice and beans via the startup’s grocery delivery service.

iFood’s cautious approach

A rise in job applicants for delivery startups is a symptom of a coronavirus side-effect Covid-19: unemployment. 

As staff are laid off or are temporarily out of work because businesses have closed their doors, many people want to find a job that can provide them with an income.

What’s more, Latin America’s informal economy greatly composed of street vendors are also major targets of the pandemic as passersby cease to wander the streets.

Either way, it might seem logical that consumer-oriented logistics startups like iFood or Rappi hire deliverers like crazy to satisfy demand. Nonetheless, it’s a big risk for many reasons.

For starters, the pandemic and self-isolation won’t last forever. So an intensive hiring and onboarding process in the medium to long term will be futile.

On that note, an intensive hiring process may sap the startup’s profits and comes into conflict with its objective of achieving “balanced growth.” What’s more, accepting many people at once may lead to things falling between the cracks wherein perhaps a less-than-ideal or risky candidate is hired.

It’s a delicate dance these delivery startups are performing. On the one hand, they have a unique opportunity to rake in more fees per delivery. But they also have long-term profitability to think about.

Related articles: Tech and startups from Brazil!

-ML

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