Singaporean

How S'pore Is Benefitting From The Hidden Food Delivery Rider Micro-Economy

Food delivery riders in Singapore are generating their own micro-economy.

The food delivery market is expected to hit US$464 million by 2020 in Singapore and experts estimate that it will contribute 40 per cent of total restaurant sales by 2025.

Given the strong demand for food delivery, it’s not surprising that the number of delivery riders in Singapore has also significantly increased.

Food delivery giants Deliveroo and Foodpanda reported a spike in the number of rider sign-ups during the circuit breaker.

At the last count in April, the two had a total count of over 15,000 riders. Fellow food delivery giant Grab declined to comment on the figures.

Given the rising number of retrenchments in Singapore, many people are turning to the gig economy and jumping onboard the food delivery bandwagon.

However, being a delivery rider is not free — there are many expenses that this group of people need to spend on.

But as the number of riders grows, many businesses are also springing up to support their careers. Here’s a look at what some of these businesses are.

A Growing Demand Of Bicycles

Riders mainly divide themselves into two camps: those who cycle, and those who ride motorbikes. People who deliver on foot are only a small group.

Joel Chong for one, is a part-time delivery rider who has been working for the ‘big three’ — Deliveroo, Grab and foodpanda — since 2018.

In the past two years, he has already gone through two bikes.

The first is a premium bicycle sold by local brand Ascent Bikes. The second is an electric bicycle (e-bike) sold by another local brand, Punggol Lew. Both bikes cost at least S$1,000 — half his monthly earnings.

deliveroo rider bicycle
Image Credit: SGSME

Bikes above S$1,000 are popular among riders who are willing to pay for comfort, safety, and a better experience. However, cheaper bikes are equally popular among riders, Joel observes.

The Decathlon brand, in particular, is well-loved for its range of “decently-priced” bikes, coming in at around S$200 to S$400 for a set of wheels.

Regardless of which bikes they go for, most riders have to take their bikes for recurrent servicing, which can cost up to S$100.

Those who use higher-end bikes need to change their gear every couple thousand kilometres.

On the other hand, cheaper bikes need more frequent maintenance servicing, which can amount to higher costs of about S$300 a year.

Moving From E-Scooters To E-Bikes

After e-scooters were banned from footpaths and roads, most riders turned to e-bikes as their new vehicle of choice, Joel observes.

Based on a quick online search, the typical price of an e-bike ranges between S$390 and $1,400. Joel’s JI Move e-bike, in particular, costs around S$1,200.

E-bike riders also need to buy spare batteries, says Joel, who uses two batteries per shift.

One battery costs up to S$300. While larger ones store more energy, they cost a hefty S$800 — and they’re also rarely used due to their heavier weight.

“(Because of the weight and price), there’s a dark market for battery repacks,” Joel divulges.

Some riders solicit underground manufacturers for repacks so that the batteries can hold a higher charge, he says, adding that e-bike batteries also require the approval of the Land Transport Authority (LTA).

Bike and e-bike spending for a single rider costs, at minimum, about S$1,400 on average per initial purchase. This roughly estimates to about S$14 million generated for bikes per 10,000 riders alone.

Investing In Small Motorcycles

The motorcycle industry is also benefitting from the growth in delivery riders.

The number of motorcycles in Singapore has been decreasing since 2011, but numbers rose from 137,000 to 140,000 between 2018 and 2019, according to a Statista report.

Notably, the rise in the number of motorcycles coincides with the timing of Grab’s food delivery service launch in Southeast Asia.

Deliveroo Motorcycle Rider
Image Credit: Roo Community Singapore

Vicknash Muthaiah (Vicky), a full-time foodpanda and Grab delivery rider, recounts that delivery riders saw a swell in numbers during that period.

Vicky, who has been delivering for the past two to three years, has spent S$1,800 on a small secondhand motorcycle for his delivery job.

The delivery rider already owns a personal motorbike, but it was too big and “clunky” for delivery. Reasoning his second purchase, he says that small, cheap bikes can be abused, and also use less petrol.

It’s common for delivery riders to trade their existing motorbikes for a cheaper, smaller bike, he adds. Smaller bikes are faster and maintenance costs are also lower despite the higher frequency of repairs.

Typically, a cheap Class 2B used motorbike costs anywhere between S$3,000 and S$10,000, according to SG Bike Mart.

Sharing a breakdown of typical bike expenses, Vicky says that miscellaneous costs can amount up to S$300 a month and a rider typically spends S$40 on servicing every two weeks.

Additionally, petrol can cost over S$268 for a frequent-use rider.

Helmets, which cost around S$50, are also a compulsory purchase for motorcyclists under LTA regulations.

In total, a new rider who decides to buy a secondhand motorcycle would need to invest an average of S$6,000 per year on motorcycle and maintenance.

Using offhand calculations, that means an influx of 10,000 new riders would result in net purchases amounting to about S$60 million.

Donning The Delivery Uniform

Riders like Joel and Vicky also make other small purchases on top of their main investments into vehicles.

Both estimate the price paid for apparel to amount to a one-off of around S$200 per rider.

Compulsory purchase for delivery riders include the welcome pack from food delivery firms, which consists of the rider’s clothes, food delivery bag, and an optional raincoat.

The average cost of a welcome pack across the ‘big three’ is around S$100.

Grab Pack
Image Credit: Rappler

On top of the basics, delivery riders also purchase arm socks, activewear and covered footwear from brands like Decathlon.

Combined, that’s about S$2 million spent on apparel per 10,000 riders.

Insuring Against The Worst-Case Scenario

Delivery riders don’t have to provide a portion of their earnings to the Central Provident Fund (CPF), but their propensity for traffic accidents means that insurance purchases are crucial in case of a worst-case scenario.

“Riders normally get into an accident at least once,” Vicky admits.

Delivery riders rushing for time limits tend to make reckless decisions, particularly for younger riders, he explains.

A trip to the A&E already costs around S$90, says Vicky. Those with serious injuries, like fractures, are unable to work and would need to claim insurance to cover their health and living expenses.

To date, Grab, foodpanda and Deliveroo have declared that third-party insurance has been purchased for their riders. Deliveroo stated that its riders have been covered for up to S$1.5 million since 2019.

bike accident singapore
Image Credit: Stomp / Facebook

Taking out commercial insurance isn’t always compulsory but for platforms like Grab and Deliveroo, riders need to take out their own commercial insurance plans to cover accidents that occur during deliveries.

The popularity of delivery rider insurance is such that companies like NTUC Income and AXA are offering commercial insurance catered specifically for delivery riders.

For a typical 18-year-old motorcyclist with zero experience, the cheapest insurance plan costs around S$700, with comprehensive plans going up to S$1,100, according to Seedly.

That means that insurance spending can reach over S$10 million per 10,000 delivery riders.

Total Expenditure Of S$86 Million

One of the few bright spots in the 2020 economy, the food delivery industry is generating businesses of its own — in the bicycle, motorcycle, apparel and even insurance industries.

food delivery rider expenses singapore
Breakdown on expenses of a food delivery rider / Image Credit: Vulcan Post

Based on back-of-envelope calculations, delivery riders may have already returned an estimated S$86 million back to the economy.

Although the delivery rider has its own hidden costs, they earn it all back, says Joel.

He adds that delivery riders earn a decent wage. He reportedly earns about S$2,400 per month, based on a four-day 12-hour shift.

Reports have also stated that top-performing riders can earn up to S$7,000 per month — though netizens have responded to this statistic with scepticism.

On top of their major upfront investments, delivery riders’ day-to-day purchases, like the hawker shops they frequent, are also benefitting from their patronage.

Currently, there’s little to no research on the delivery rider micro-economy. It’s also difficult to assess the extent of spending that delivery riders make based off on-the-ground interviews.

However, according to our preliminary investigations, it looks like Singapore has found ways to generate a healthy business ecosystem of its own.

Featured Image Credit: Time Out

Subscribe to Vulcan Post Newsletter

Stay updated with our weekly curated news and updates.
 
Read more about our privacy policy here.