Wolt looking to expand to smaller cities

CEO of Wolt Baltic Liis Ristal. Photo: Konstantin Sednev / Postimees

CEO of Wolt Baltic Liis Ristal says that the company will try to expand as far as profitability will allow in Estonia. The food delivery service has done brilliantly in Tallinn and Tartu and will be setting its sights on smaller cities now.

People were allegedly queuing to work for you in spring. How is the situation today?

As the crisis deepened, we saw restrictions hit our restaurant partners and an avalanche of job seekers. The result was indeed that we had thousands who wanted to come work for us. We still have a queue of prospective couriers. However, we have assumed the obligation if we can call it that of ensuring balance between demand and supply on the platform. We know that if we invite a courier partner to offer services via our platform, offer us their time, we need to guarantee them income. Otherwise, you are left with an unfair relationship. That would not match our values and principles.

Who are your couriers? Could you give a few examples?

We have over two thousand courier partners in Estonia from more than 20 nationalities, and I believe it is a rather good cross section of the Estonian society. Our youngest delivery partners at 16-year-old boys and girls who are working weekends with their parents’ blessing to earn enough money for a new computer or smartphone. At the other end of the spectrum are retired people who work as couriers so as not to be alone.

We offer them a social dimension, in addition to extra income to complement their pension of course. We also have entire courier families: mother, father and children. We had an Egyptian man for whom it was important to provide for his family. He bought a bicycle and worked almost seven days a week.

How much do couriers make?

It depends on how many orders they deliver; we pay €4.5 per delivery on average. We want a courier who works 40 hours a week to make the average salary.

You have decided to hire some of your couriers. Why have this policy? Other digital platforms are using different models and have saddled the worker with every single responsibility.

It is a somewhat broader ideological and philosophical matter. Wolt is a Finnish company and our values are deeply rooted in Nordic and Western culture. We have paid all taxes in full from the first day and offered our partners maximum security. We find it fair. That is why we have always offered our delivery partners the chance to work on a private contract, meaning we pay all the necessary labor taxes on their work, as well as working through their own company. It is not our place to dictate how people offer us their time.

Are you not afraid of losing your competitive edge this way?

It is not an area of competition. Paying taxes is elementary. For private individuals and all companies. Tax avoidance is reprehensible and would clash with everything we stand for. But in terms of pure financial expediency, tax optimization would be more productive.

Estonia has aimed its focus on digital platforms lately, with amendments planned to order companies to present an annual overview of service providers.

I understand where the problem is coming from. We comply with all obligations and legislation. Because we already pay labor taxes on most of our couriers, for a total of €300,000 in the last quarter, it is not a problem for us. The only message we have for the state is that the reporting obligation should be made as simple as possible, take little time and be the same for everyone.

It seems to me that a courier service requires sufficiently wealthy clientele. What other trends are involved?

Estonia is still at the beginning of the curve. We have been operating for a little over four years. Before Wolt, restaurant food delivery was a niche service, while we have grown in the conditions of strong competition. However, I dare say we are still taking baby steps as an economic category, especially looking at Asia or Western Europe. In South Korea, every resident orders in ten times a year on average.

What is the figure for Estonia?

I believe that the category’s market share is 20 percent or less. Because the service is offered mainly in two cities. But I like to think that preparing food will become a hobby as opposed to a daily chore in the future. Looking at recent Statistics Estonia reports on use of free time, a woman in Estonia on average spends 1.5 hours on cooking food and 30 minutes on buying groceries. Men do not spend as much time on it. If we think that we could invest that time in hobbies instead, we see value added and that is what is contributing to consumption.

Would food delivery even work or be profitable outside of Tallinn and Tartu?

There are two sides to this. Is it possible? Yes. Is it feasible? Depends on how one defines feasibility. We at Wolt clearly feel that a branch needs to be profitable and cannot exist on money from the head office or investors. That is why we are only present in two cities. But we are planning a few ventures outside of Tallinn and Tartu next year.

You are the CEO for the entire Baltic region. What is happening in other countries?

All three countries are in somewhat different stages of development. Not just in our category but also in terms of their economies. Lithuania is the Baltic wunderkind today. A few legacies still need to be addressed to allow the economy to take off that also applies to our sector. We do not exist in a vacuum or cut off from the business environment. There is the question of the definition of a city – how many people a settlement needs before we can refer to it as a city.

What is your definition?

It has changed over time. When Wolt started out in Estonia, it was one big experiment because it was believed that the service could not be profitably offered in a small city sporting such low purchasing power. We have proved them wrong and shown that a city the size of Tallinn can be profitable.

We went to Tartu next that is a little bit smaller than Tallinn. We have managed to hit our targets there too. Now, we will be setting our sights on smaller cities until we reach a point where it is no longer lucrative for us.

Do you see new delivery firms as welcome competition or are they rather a nuisance?

Covid has given us multiple competitors. A recent Swedbank ad that urged people to take a small business loan to create a delivery company is a good example. But it is very welcome as more players means a higher water level that also lifts us up.