Gig workers are suffering due to high costs and lower earnings, says IFAT

Effigies burned, cries of protest, thousands in yellow jackets on a strike. For a week, the Delhi National Capital Region turned into a theatre of conflict between Blinkit and its delivery partners over a new rate card.

The Zomato-owned company cut payout to Rs 15 per delivery from Rs 25 earlier. The revised pay structure has a distance-based variable component, which the company says is "fair". The riders call it unfair. They fear it will cut their monthly earnings in half.

The stand-off temporarily shut half of Blinkit's 200 dark stores in the region. So be it, said the quick commerce company—unrelenting in its stance. For a week, the Blinkit strike smouldered under the hot summer sun, but has since cooled off with majority of the delivery partners returning to work. All's well, declared Zomato in a stock exchange filing, brushing the disruption aside, saying it caused no material impact on the financial performance—a hit of less than 1 percent in revenue.

However a lot of experts CNBC-TV18 spoke to believe that the root of the problem lies in the business model of quick commerce which promises consumers instant gratification while delaying profitability as most players in the sector continue to burn cash and report losses.

Last year, we saw similar protests by Swiggy's partners and in 2019, Zomato's gig workers went on a strike protesting paycuts. As companies increasingly focus on the bottomline and bring efficiencies into models, we are witnessing a host of cost-cutting measures across sectors.

Speaking to CNBC-TV18, Shaik Salauddin, National General Secretary of IFAT, said that delivery workers are suffering due to high costs and lower earnings. He added that quick commerce workers are earning only Rs 10,000 against promises of Rs 30,000-40,000.

Abhishek Bansal, Co-Founder & CEO of Shadowfax, said, "Retail in this country is a very tough business. It is extremely dependent on the kind of product that you are selling, where are you selling, what kind of choices are you making. If you go all out across all geographies, then probably this business does not make sense. Today at Shadowfax, we are in a position where we are working with every quick commerce company in this country and see every company is operating in a very different sort of a modus operandi. There are companies like Zepto which probably are focusing a lot on fresh, which is supremely high on margins but there will be multiple other companies who might be selling commodities and going after GMV sales. So in those kind of things it is actually very difficult to make some of the margin related elements."