One of the key selling points of our delivery robot future was that it would be less expensive than existing human efforts. Yes, automation would take some human jobs, but the savings would create cheaper food and faster service. But a story out in WIRED today shows that at least right now, robot delivery companies are charging the same commissions as their human counterparts.
The main thrust of the WIRED story is that robot deliveries should be having a big moment during this pandemic. Robots reduce human-to-human contact, can go into dangerous areas, and can operate around the clock. But they aren’t having that big moment, hampered by technical limitations, local regulations, and in some cases — cost.
WIRED highlights two delivery companies: Starship and Refraction. Starship makes cooler-sized robots that are best known in the U.S. for scurrying around a number of college campuses bringing meals and snacks to hungry students. Refraction makes the bigger REV-1, a robust three-wheeled robot that can tackle inclement weather and launched lunch delivery in Ann Arbor, MI at the end of last year.
In Fairfax, VA, where Starship recently started making restaurant deliveries, the owners of the Havabite restaurant told WIRED that Starship is charging them 20 percent commission fees (after a one-month free trial), which they said is more than the restaurant pays GrubHub for delivery.
Up in Michigan, Refraction is charging 15 percent commission on deliveries, which WIRED says is “a rate equal to or lower than that charged by human-powered delivery apps.”
We have reached out to both Starship and Refraction for confirmation clarification. A Refraction rep emailed us the following: “Average delivery fees for a restaurant are typically 30% (like through Doordash or Uber Eats) and [Refraction is] charging half of that. On the consumer side, there is a $3 fee which is about a quarter of the typical order cost. Refraction is also now testing a grocery delivery pilot with zero fees.”
Back in January of 2019, as it was rolling out to its first college campus, Starship told us that it “uses different revenue models depending on location,” and that it “sometimes charge[s] a margin on top of the delivery fee.” For its part, Refraction told us in July of 2019 that it was charging a delivery fee that was better than what Uber is charging.
I get that 2019 was a lifetime ago and a lot has happened since then. I also get that robots ain’t cheap, especially when they are just starting out and haven’t reached scale yet. But human third-party delivery services are being vilified for cutting into the already slim margins of restaurants during this pandemic crisis, so much so that local governments are enforcing caps on delivery commissions. You’d think robot companies, which still have technical and regulatory hurdles to overcome, would want to make them as attractive an alternative as possible.
But maybe that isn’t possible right now. This COVID-19 pandemic is impacting every corner of the economy, including the companies behind these burgeoning robot delivery services. It’s not exactly the easiest time to raise fresh capital to fuel growth. Starship reportedly went through a round of layoffs at the end of March.
Despite all this, the coronavirus has strengthened my belief that robots are the future of delivery, especially in a more socially distant post-pandemic world. Hopefully the economics will work out so robots can help us get through all this to find out.