Can Errand-running Apps Woo China's Market?

Luo Yu China Plus Published: 2017-02-23 18:18:49
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Can Errand-running Apps Woo China's Market?

By Luo Yu

Could it be that more and more people are becoming lazy? This is particularly true on China's university campuses.

For those who are too lazy to run their own errands, there are now others who are willing to do it on their behalf for a small price.

There are two types of customers for this service: those who claim they are BUSY, and those who admit they are LAZY. But all are happy to have someone run errands for them, such as collecting a YTO/DHL parcel or a delivery of Kung Pao chicken with rice.

The mobile errand-running services offer college students a chance to make extra cash. One student from Beijing's Minzu University of China told me that one of her classmates had earned 600 yuan, or roughly 100 US dollars, in less than two weeks. Considering their under-privileged family backgrounds, this money can be a life-saver, enabling them to achieve higher living standards.

But can such mobile errand-running services turn out to be a successful business just like the almighty-powerful online marketplace TaskRabbit in the U.S. that can help you with all sorts of errands and chores?

My answer is a resounding NO. Cut to the chase, the gulf between the two societies is decades deep in terms of trustworthiness and the maturity of the credit system. In China, people are not typically trusting of those they don't know. Get a stranger to pick up your parcel, that's maybe fine. But most of us would not dare hire any old Tom, Dick or Harry to come over to assemble your furniture or teach you how to bake if they are amateurs and are not associated with a professional service company. What if they were to steal my possessions? And what if I am sexually harassed?

On the flipside, despite the fact it matches freelance taskers with clients in need of a certain service, the money is not attractive, leaving an extremely tight profit margin in the online marketplace. Take the campus-based errand-running app Xiaoneida for instance, most jobs only bring in around 5 yuan, or about 70 US cents. That's the total revenue from an order stripping out operating costs and expenses. According to Xiaoneida's co-founder Zhang Guoqiang, the company is still seeking a viable business model in order to break even.

Another case is exemplary. A similar campus-based app named 'Gaffey Pie' -- sometimes known as 'Garfield Dispatch', although it has nothing to do with the cat Garfield -- has morphed into an e-commerce platform, rather than it's previously declared its aim of 'providing errand-running businesses based on campus and aimed at expanding the service to Central Business Districts (CBD's) and other communities.'

'Linqu' is a similar app designed for city-dwellers, especially those who work and live in and around CBDs. You can 'dispatch' someone to get your Starbucks coffee; line up for you to get outpatient admissions; or buy some medicine after the midnight. But the platform is facing mounting criticism with respect to its slow response time and ludicrously high delivery fees! And it only operates, sadly, in a handful of first-tier cities in China.

Even on campus, the only established territory of China's mobile errand-running business, the service is struggling with other problems on top of the profitability issue. Content wise, Zhang Guoqiang said that more than 80% percent of jobs on offer are for users to pick up parcels or deliver food. But some tasks can be a little more creative, and others may well have crossed the line. The following requests gathered from Xiaoneida's online community are my particular favorites.

''Sigh, I want a girlfriend so bad!"

''I want someone to write an experiment report from the life sciences course. Those who are interested, message me.''

''Click farming wanted. Do an online course. 30 yuan will be paid.''

"I need a shower card to the men's bathroom. I'll be quick. Less than 3 yuan.''

Dr. Zhu Di, a sociologist with Chinese Academy of Social Sciences has suggested the online platform should enforce real-name registration with their university ID numbers. And services like taking exams or writing papers should be forbidden. Well said, but it's a mission impossible. The company doesn't have much incentive and those misconducts are still within the law. They are JUST a bit unethical! Even if the there were clear rules and reglations, who will police all those reckless activities?

Apart from fraudulent activities, Dr. Zhu argued that apps like this could have an unintended negative affect on users' social values and physiological health, saying that people just avoid their responsibilities by paying a certain amount of money. The business logic will invade people's beautiful hearts -- the willingness to help each other might ebb and the word 'reciprocity' could possibly only be found in a dictionary in the future, rather than in real-life context. Rich kids can let others run errands for them, making previously not-so-obvious family background differences among students more obvious. This has always been the way of the world – the rich with inherited advantages in wealth would hire the poor to help them with daily chores. Even so, the emphatic contrast in their social status is faced earlier than expected with such services gaining popularity on campus. Some unscrupulous young adults will even exploit those who want to make quick cash, sidestepping moral values.

I agree with angel investor Liu Chengmin who told me that people are getting lazier by nature, that's why we have a more extensive division of labor. He contends that if a product is in line with human nature, it's easier for them to achieve success. That's probably why we have seen a ballooning sharing economy businesses in China in recent years. One advantage is that Uber or China's Didi Chuxing and Airbnb or China's Xiaozhu, or booming online food takeaway services, can charge users 'dynamic' fees based on real-time supply and demand. And service providers have something to share, a car and a driver, an apartment and professional food delivery services, etc. 

The Errand-running business is not the same. Taskers don't have much to offer -- the only underused assets from them are time and physical strength, coupled with a sense of direction -- and they can never grind out decent profits. Service seekers, on the other hand, would rather resort to specialized platforms if they face complex household chores or need things done quickly. On mobile errand-running apps, the matching process might be quick -- it only took me 5 minutes to get my two bananas and an apple after I sent my request by using an app -- but the service itself is positioned at the lower-end of the service chain without adding much value. And unfortunately, services can easily move from online to offline, where companies might find it long and painstaking to reach an ideal economic scale.

Finally, let's dive deeper into the investment philosophy across the tech industry. Maybe the most compelling discrepancy between the two markets is that in the US, companies really spare no effort in researching disruptive technologies, conducting exhaustive tests and making headway in user experience on their products. In one word, to make their investors and customers HAPPY. However, many Chinese entrepreneurs with a flippant attitude do not really want to do a business earnestly. What they want from the bottom of their heart is to swindle investors out of millions by telling captivating stories and engaging themselves in endless cash-burning races. They believe that the gigantic Chinese market can never fail to lure enough customers, even with products of low quality.

It seems that mobile errand-running apps are unlikely to bask in public adoration and the business prospects are far from promising.

Well, it won't die, but will face waning demand for services that rely solely on the low-end workforce. Without a better understanding of the market and continuous innovation, most of the errand-running apps are doomed to fail.

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Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Luo Yu Luo Yu is a freelance writer, CRI's former co-host of RoundTable, discussing the hottest social issues in China. He was also former producer and host of Biz Buzz, a weekly business program which includes exclusive interviews with global business and political leaders. Former guests include former Australian Prime Minister Kevin Rudd, former Pakistani Prime Minister Shaukat Aziz and Nobel Laureate in Economics Pro. Thomas Sargent. Luo Yu holds a MSc. Finance and Investment, a MSc. Management Science and Operational Research, a BSc in Biology and a BBA in Business Administration. Luo Yu loves exploring new opportunities. His boldest move might be when he switched from engineering to broadcasting. It’s a move he considers to be the wisest decision he's ever made. Sina Weibo: @CRI罗煜 Email: Michael P. Toothman Michael P. Toothman is a Los Angeles-based speaker, educator, Sinophile, and expert on Leadership, Communication, and Project Management. He teaches for the University of California, Riverside and has mentored and trained over 3,500 leaders from over 1,000 companies in 25 countries. Jonathan Rechtman Jonathan Rechtman is a Chinese-English conference interpreter, entrepreneur, writer and public speaker. Based in China for over a decade, he has interpreted for multiple presidents and prime ministers, Fortune 500 CEOs, Hollywood stars, Nobel prize winners, and a princess. He is the co-founder at Cadence Translate, an on-demand translation solution for multinational corporates and investors. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Shafei Moiz Hali Dr. Shafei Moiz Hali studied at George Mason University, Virginia, USA and specialized in the field of International Commerce and Policy. He did his PhD from Huazhong University of Science and Technology, Wuhan, China specializing in Chinese foreign policy focusing on the Belt and Road Initiative and energy issues. Currently Dr. Hali is working as an Assistant Professor with the Faculty of Contemporary Studies, National Defence University (NDU) Islamabad, Pakistan. George N. Tzogopoulos Dr George N. Tzogopoulos is a senior research fellow and advisor for EU-China relations at the Centre international de formation européenne, Nice/Berlin.