In recent months, due to the severe world events, the price of gas has risen sharply. This has directly and negatively affected our courier partners at Wolt. While many use bikes, more drive with a car, a scooter or a motorbike. For them, delivering has become less appealing. You are basically left with less money after a delivery, because gas costs more. 

People are also spending less time at home due to the weather getting better, and on top of this seasonality, Covid restrictions in Finland have have gradually faded out. All of this leads to customers ordering less on Wolt, meaning less deliveries for couriers. 

This has led to several Finland-based couriers contacting us in recent weeks. For a good reason, they have asked us especially one thing: to start paying more for deliveries than previously agreed.

We fully agree with this request. One main purpose of Wolt is that people can earn when they want by delivering things from merchants to customers. When delivering becomes more expensive for couriers, we want to check if partnering with us still makes financial sense. (We also supported restaurants with support packages when Covid struck everyone.) 

Thus, we are now committing to start paying couriers more. We want to also give our most sincere thank you to everyone who is delivered as our partner during these tough times. We truly hear you.

Next up, it is a question of what kind of changes we will make in paying more, and how those changes will affect the whole system of couriers, customers, merchants and Wolt.

We’ll be piloting a new payment model that would mean several million euros more paid to couriers yearly

In the past few weeks, we have spent tens of hours talking about the topic with dozens of couriers in different Wolt cities. Discussions have taken place live at the Wolt office and on the phone. We have arranged group video calls, talked over WhatsApp, and so forth. We have sent out surveys searching for ideas on what to improve and gotten hundreds of answers. In those surveys, we have also asked for feedback on different options for new payment models that we could first pilot in Helsinki and then see how the learnings would apply to other cities.

The latest situation is still tricky, as different courier partners have different wishes from the partnership. Some would like to prioritise having a higher so-called “base fee” (the fee you are paid in any case, regardless of the distance delivered). Some would like to prioritise the distance driven taken better into account in the payments. Many agree that Wolt is still a good choice among different companies one could partner with, but certain things have still quickly gotten worse, and Wolt needs to do something about it.

Based on the majority of the hundreds of courier responses to our surveys, the next step for us is to pilot a model that, if adopted, would increase the amount Wolt pays to couriers by several million euros over the next 12 months.

The average total paid out in the new model would be higher, as the model would start paying for distance between courier, merchant and customer clearly earlier than before. As a fully new thing, a courier would also start being paid for distance towards the merchant. These changes would address the key issue of rising gas prices. It is possible that the base fee would be lower than now, but in that scenario we are committed to the fact that the total paid out would increase clearly from now.

All of the above being said, we still want to be honest: we have already learnt that there will be no one model that will satisfy all the couriers and everyone using Wolt.

To give an example, the only income to Wolt comes from 1) the commissions that merchants pay and 2) the delivery fees that customers pay. As a whole, we are still a loss-making company. As we are committed to paying couriers more, our options to make that happen are either to increase our losses from what they already are, or increasing customer prices or merchant commissions. What is more, if we invest more into courier earnings, we have less money for initiatives that grow demand, meaning less orders in the long term. So, these are not easy calls to make when trying to build a sustainable company that acts responsibly towards couriers, customers and merchants. The current hypothesis is that at some point, we will do a slight increase in customer delivery prices, but this is not final yet. We also hope that if this happens, customers will understand the reasoning: getting something delivered costs more if gas prices rise.

A couple of side notes

Recently, some couriers have stated that they might stop delivering either temporarily or permanently as they are unhappy with us. It is important to note that not delivering and choosing when to do deliveries and when to stay home is always 100% the right of any Wolt courier partner, for any reason. 

Secondly, we want to address something that we’ve heard rumors about – i.e. whether or not Wolt is bringing in new courier partners to deal with these issues. To be clear, we have not onboarded new courier partners in the last few weeks, and we will also not be onboarding new courier partners as an answer to an individual moment when current courier partners choose not to deliver due to being unhappy with Wolt. Only in situations where we are facing longer periods of time where we are unable to properly serve our customers and merchants, we have to take into account our duties also towards them and consider onboarding new courier partners. But to be clear, we are not saying “if couriers protest our actions, we will immediately start working with new courier partners”. What is more, we will also never quit partnering with someone just because they express their opinion.

Thirdly, we want to address the question of how much the gas price increase has actually increased delivery costs. The average current driven distance for a Wolt delivery is roughly 5 km, and that the increase in gas prices has roughly been 0,5 € per litre. If we assume gas consumption of 8–12 l/100 km, we end up with 0,2–0,3 euros more cost per delivery. (Also, it’s good to remember that all gas costs can be deducted from one’s taxable earnings.)

Summing up

This is definitely one of the more challenging situations we have faced so far, not least because we cannot affect the root cause of the issue – the rising gas prices. 

A tough part is also that we already know based on the discussions we’ve had with couriers that there won’t be a solution that is both sustainable and that will make everyone happy. Then again, the positive part is that we have already learnt a lot of what is currently important to everyone delivering, and we are sincerely doing our best also in hearing people out in finding the best way forward.

Thanks for reading this long of a message, and hoping all the best to you during a tough Spring. 

Best,

Henrik Pankakoski
General Manager, Wolt Finland