How does Algorithmic Management work on gig platforms?

Machine learning has been most effectively utilized by Uber, Postmates, Deliveroo, Bolt, TaskRabbit and Glovo to give them a competitive edge in the emerging platform economy.

Many of these companies employ similar tactics to achieve optimal workflow processes of their continuous exchange of services worldwide for consumer and provider satisfaction and work efficiency alike. The implementation of advanced technological processes has helped many of these companies create a unique business model that updates in real time to fit the needs of consumers.

Algorithms are the fundamental foundation on which mathematical equations have been solved since antiquity; they are also the basis for execution of computer functions and tasks. An algorithm is a rigid, unambiguous set of instructions given within specified space and time with the purpose of solving a finite problem through well-defined successive steps.

Postmates

Postmates is an app-based food delivery service that in mid-2020 was bought by Uber for USD$2.65 billion. Deliveries using Uber Eats and Postmates combined account for 36% of the app-based food delivery sector. While Postmates alone brings in about 10 million active users on a monthly basis.

Postmates has a similar algorithmic model to that of UberPool when it comes to delivering food, with an emphasis on route efficiency instead of optimizing based on available drivers. In trying to maximize the amount of delivery per hour, Postmates has three different delivery models: solo, batched and chained.

30 % more efficient with batched deliveries

Solo deliveries are single deliveries that are picked up and distributed by a Postmate driver to a consumer. With solo deliveries, two orders can be delivered within the timeframe of 55 minutes thus averaging 27.5 minutes per delivery.

Batched deliveries give multiple orders from a single restaurant to one driver to then be dropped off at multiple locations. This method typically allows for 2 deliveries to be completed in 35 minutes resulting in an average delivery time of 17.5 minutes. Whereas, chained deliveries allow for one driver to pick up multiple deliveries from multiple restaurants and deliver those to multiple customers. Postmates have concluded that batched and chained deliveries are 30% more efficient than solo deliveries, thus they utilize demand shaping algorithms to increase the chances of batch orders.

Read the whole paper on algorithms role in the gig economy and examples of how the platforms use them to steer prices and ratings: https://www.appjobs.com/institute/algorithms-role-in-the-platform-economy/