Joint-Venturing into the Gig Economy: Aldi Partners with Deliveroo to deliver groceries
July 8, 2020
2 min read
What's going on here?
Aldi’s trial of on-demand home grocery delivery in partnership with Deliveroo will now be extended following positive feedback from customers.
What does this mean?
Aldi’s partnership with Deliveroo was initially trialled in May across eight stores in the UK in a bid to scale the supermarket’s online delivery business. The tie-up allows Aldi customers to use the Deliveroo app to choose from more than 150 essential items which are packed in-store by Aldi staff and passed to Deliveroo riders.
Earlier in April, Aldi expanded its previously limited online delivery service to include food parcels with essentials such as bread, milk and fresh produce. This move mirrored other retailers’ introduction of food box schemes to help meet soaring demand during the COVID-19 pandemic.
What's the big picture effect?
Aldi’s partnership with Deliveroo comes as anti-trust and competition laws are relaxed in response to COVID-19. In March, the UK government announced that supermarkets would be allowed to work together to meet demand for food but that it would remain vigilant in case of any objectionable infringements. The relaxation means cooperation such as sharing of data and labour, including distribution and delivery systems, will be temporarily excluded from the section 2 prohibitions in the Competition Act 1998.
The pandemic has also paved the way for gig economy-style partnerships between supermarkets and app delivery services in an effort to meet grocery demand. Whilst the scaling of delivery makes these partnerships appealing to those workers who have fewer working hours, it also gives rise to the issue of the overall sustainability of gig economy style arrangements with supermarkets. Over the long term, the impact on margins of adding another player to facilitate the delivery of goods is likely too great for the partnership to be sustainable. In addition, the growing criticism of the exploitative practices of gig economy companies is making it difficult to justify their models. This is especially true given the UK High Court ruling that Deliveroo riders are excluded from the Trade Union and Labour Relations (Consolidation) Act 1992 due to their status as independent contractors, which prohibits them from collective bargaining.
Ultimately, the partnership between Aldi and Deliveroo demonstrates the convenience of using gig economy platforms like Deliveroo to facilitate supermarket growth. However, as the gig economy model responds to demand, once the pandemic subsides it seems unlikely that such partnerships will continue to thrive.
Report written by Sofija Beljcic
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