Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, November 19, 2019

The "Last Milers": the legal vacuum of e-commerce catalysts

The business model of electronic commerce companies focused on the last mile, that is, in the delivery of the package to the user after online purchase, will invoice around US$ 4.89 billion at the end of 2024. However the wave of growth brought with it regulatory challenges that have not yet been resolved.

The so-called "Last Milers", that is, the platforms specialized in moving online orders from distribution points to users' homes, became a key point for the growth of Internet sales of retails, which seek outsourcing of the supply chain. Globally, it is estimated that companies dedicated to this last mile of e-commerce will earn US$ 4.89 billion at the end of 2024.

The “Last Milers” business model is based on the use of technology, with geolocation and use of Big Data and according to the companies themselves, on the principles of collaborative economics. They are defined as intermediaries between independent drivers and users. The central debate revolves around the regulation and working conditions of the messengers, especially for social security or possible occupational accidents.

Marcos Pueyrredón, Global VP of the Hispanic markets of VTEX and President of the eCommerce Institute, assures that today the challenge is to incorporate them into the channel strategy, so that they articulate their own express delivery services. Anyway, in a mature e-commerce, the "pick up store", that is, the withdrawal at delivery points, is around 80% of operations. Here lies the importance of the physical store to be able to withdraw purchases: GPSFarma, a platform created by Droguerías del Sud (which supplies 8.000 of the 13.000 pharmacies in Argentina), invoices around US$ 400.000 per month, with the withdrawal option in store as a lever for growth.

The food and cosmetic industries dethroned the electronics industry in terms of business maturation, as Gustavo Sambucetti, Institutional Director of the CACE (Argentine Chamber of Electronic Commerce), explained to Convergencialatina. In the last CyberMonday, at the beginning of November, 560 brands participated and a total of US$ 200 million were invoiced, 64% more in turnover compared to the CyberMonday 2018. For the ecosystem of these industries, incorporate the last milers decreases the cost of logistics, which affects the user's shopping experience.

Rappi operates in seven countries in the region: Argentina, Brazil, Chile, Colombia, Mexico, Peru and Uruguay. The Colombian startup has a total of 100.000 dealers distributed in these countries. Cornershop, of Chilean origin, operates in a similar way, but in Chile, Mexico, Canada and Peru. Walmart wanted to acquire it but the transaction was locked for regulatory reasons. The one that did advance was Uber and it is expected that in 2020 the operation will be completed so that it begins to provide services in the rest of the countries of the region.

Regulation

In Colombia, the Green Alliance party presented a bill in Congress that seeks to regulate platforms such as Rappi, Ubereats, among others. Punctually, it proposes that there should be an accident risk policy, one of lost profit and labor formalization must be guaranteed, with contributions and pensions.

Meanwhile, in Argentina, the Justice asked the Government to prohibit the activity of Rappi, Glovo and Pedidos Ya throughout the territory of the City of Buenos Aires, until security measures required by the Traffic Code and Local transport are met, but the ambiguity between the concept of collaborators and employees generates a legal vacuum that still persists.

Meanwhile, the registration of the Asociación de Personal de Plataformas in America was requested in Argentina, which will represent the more than 20.000 people working through apps in the country. Of these, 12.000 correspond to Rappi.

Another of the regulatory efforts in Latin America is in Chile, with the bill “My boss is an app”, by Deputy Giorgio Jackson and his partner Maite Orsini of the Democratic Revolution and the Ample Front. Among the most important points, the creation of an employment contract, which must contain certain minimum stipulations, such as the date of the contract, the individualization of the parties and the conditions is worth highlighting. Work safety, the right to organize and the right to act for unjustified dismissals are also considered.

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