— June 23, 2018
Twenty years ago, I was a full-time online publisher, working for a traditional magazine. At that time, we were using phone connections to dial up to the internet; websites didn’t have embedded video players; the publishing talk was about push versus pull content (remember PointCast?); Google had not yet been launched and we were using directory-style search engines to find information.
In 1999, I was considering the future of the internet – how it would become the fabric of our lives; how telecommunications would radically change; how we would all be able to watch TV online and on demand. Things have changed so much further than I imagined – with most activity taking place on a smart phone; with apps being used to control our lives.
This speed of change has given us Amazon, Uber, Airbnb, Google Home, connected wearables, sat-navs, the cloud.
Connectivity has globalized communications, bringing us closer together, sparking ever newer efficiencies and benefits, like online shopping with order tracking and fast delivery, mapping services, the ability to create your own holiday without a tour operator.
But now this technological, online revolution is starting to hit the speed bumps of real life. Suddenly, unlimited and unrestricted growth is being hampered by real world problems and tripping up the new mega brands.
Airbnb not as smooth as it once was
When it started in 2008, Airbnb set out to put property owners in touch with people looking for somewhere to sleep. The idea was simple and the premise sound. The problem is that the idea caught on in a big way. Airbnb is so huge now that it has come up against several problems.
In 2014, the regional government of Catalonia slapped a €30,000 fine on the company because of holiday lets that were not registered as such in Catalonia. That fine was later overturned in a Spanish court, in 2016, but the city of Barcelona announced in the same year that it was planning to fine both Airbnb and Homeaway €600,000 each for letting out unregistered properties.
Barcelona has been a key factor in the growth of Airbnb in Europe, but it isn’t the only city to be looking into the business. Berlin has also been using investigators to find “illegal” holiday properties. Other cities’ legal leaders have complained about illegal Airbnb lets – including New York City, Paris and New Orleans.
Then there are the revelations about people illegally sub-letting properties they do not own. One report in Australia revealed that 35% of Airbnb properties in the country are not owned by the person advertising it. There’s even a company in Australia called BNBGuard, for landlords who want to protect their properties from the dangers of sub-letting on Airbnb.
All this success for such a fast-growth “for the people by the people” business model is starting to hit financial snags too. Airbnb reportedly paid £188,000 in UK tax in 2016, against £657,000,000 in letting revenues from the UK.
The HMRC is now looking to go after the letters who make money from their properties. Some say Airbnb is better than private letting, where you have to declare tax, but this will change once earnings need to be declared, as has happened in Denmark.
Uber under fire on several fronts
Problems for Uber have been well-reported – from trustworthiness of drivers to employment law to legality of local operations in various cities.
The first battlefront for Uber was traditional taxi companies, particularly in London, where the war between black cabs and minicabs has raged for decades. After achieving a Transport for London (TfL) operating permit easily in 2012, the company’s brand grew rapidly, and things came to a head in January 2018 when hundreds of black cabs blocked London Bridge.
The blockade was sparked by anger that also followed TfL’s decision not to renew its permit on the grounds that Uber is “not a fit and proper” private car hire company for the city. Uber continues to operate while it appeals, in a process that could take years.
Similar blockades have happened previously in Spain, France and Germany, but recent activities have increased following some scandals that have plagued the business. Largely an online service, it is traditional real world activities that have created problems for Uber, and emboldened critics’ attempts to attack it.
Uber’s surge pricing (which puts up the price as demand increases) has been criticised on more than one occasion when more people call Uber to get away from terrorist attacks and natural disasters.
The company fired 20 employees following a sexual descrimination scandal started by whistleblower Susan Fowler. Couple this with criticisms of the company founder, who boasted that he calls the company Boob-er because of how popular he is with women.
The company was caught using software to avoid law enforcement, and it has fought battles in the UK over workers’ rights.
E-commerce fulfillment – the next problem area?
We used to be happy to wait for a few days for things to arrive after we buy them online. The old mail order mentality has given way to the need for instant gratification. We want it now, and if someone tells us they can get it to us today, all the better.
Google Trends shows the rise over the past five years for searchers typing “same day delivery” in their searches.
Amazon Prime is fuelling this trend, and other retailers are trying to catch up. Google Trends suggests that people in the UK also search for “Currys same day delivery” or “Iceland same day delivery”. So, we are being trained to expect a company to be able to deliver fast.
While Amazon has the technology and the PR budget to talk about delivery robots and delivery drones, the majority of e-commerce fulfillment relies on human beings driving vans.
There is a simple mathematical and logistical problem this creates. As more and more retailers try to offer faster delivery options, there will be greater need for technology in the whole supply chain – getting the product quickly to a distribution center, where it can be collected by a driver, who can get it where it needs to be within a day.
Most delivery companies, like MyHermes, DPD or White Arrow, employ drivers on a self-employed basis. DPD drivers, for example, effectively operate as sole traders or limited companies, which means they are responsible for their own employee benefits and their own job satisfaction, while being a slave to whatever they need to deliver where.
The turnover in this industry is likely to be high, meaning recruitment is an ongoing problem while demand increases. How many actual drivers, warehouse technicians and controllers will the fulfillment industry need as the e-commerce market evolves? We’ll have to wait and see how that plays out.