Optimizing Q-commerce delivery: Unravelling the interplay of fee, penalty, and rider-platform collaborative efforts

Abstract

Q-commerce businesses that promise to deliver goods and services in 10–20 min are growing 20–25% faster than those that deliver in hours or longer. Although the success of a Q-commerce company depends heavily on the performance of its delivery riders, in most cases, the riders are gig workers and face challenges related to job security, variable compensation, and long working hours. At the same time, retaining skilled and professional riders is a challenge for Q-commerce companies. Therefore, in the present study, we develop an analytical model that studies the interaction between “the delivery fees paid to the riders by the Q-commerce company” and “the efforts put by both the players - the delivery riders as well as the Q-commerce company towards a successful delivery” under two different setups: with versus without penalty. The findings suggest that prior commitments to efforts by the Q-commerce company lead to better payoffs for both the company and the riders. Moreover, contrary to popular belief, the analysis shows that the sharing of rider's effort-cost mechanism in which a Q-commerce company shares some percentage of the operating cost of the riders accrues more significant benefits. Finally, this study uncovers various managerial insights into how both players' payoffs are affected by the delivery fee offered to the riders, any penalties imposed on them, and the individual and joint efforts of both the riders and Q-commerce companies. It also aids in framing effective policies that the decision-makers could use to improve the performance of Q-commerce delivery.