Crowdsourced Delivery: A Possible Way Out for the “Last Mile” in Supply Chain
By Anthony Liu
The Last Mile Problem
With the continuous development of online shopping in today’s society, consumers are paying more and more attention to the timeliness of parcel arrival. However, problems such as labor shortage, limited working hours, and supply chain bottlenecks, increase the difficulty of logistics distribution. That said, “the last mile" has always been a conundrum for retailers. Occupying the "last mile" sector has become a strategic goal for many companies that practice package fulfillment. But with the rise of e-commerce and O2O (online to offline), logistics costs are also rising. To reduce the cost of "last-mile" deliveries, crowdsourced delivery has emerged as a means to reduce to cost and increase effectiveness. With the endless development strategies of express delivery enterprises, it is inevitable that in the future the domestic crowdsourcing express delivery market will has its dominant place.
How Important is Same Day Delivery
About 51% of retailers online offer same-day delivery, and the number is growing at a fast pace, especially for those that offer delivery services in densely populated cities. Making same-day delivery available means one more option for customers. Those who don’t offer the option or fail to deliver on the promise of ultrafast fulfillment stand to lose customers over time, that business (or lack of it) affects your customer loyalty. 49% of shoppers say that same-day delivery makes them more likely to shop online. Moreover, same-day delivery increases productivity and can increase an online retailer’s competitive edge by more than 85%.
Crowdsourcing logistics distribution has emerged as a distribution model for same-day delivery. According to a survey conducted by Bringg of 500 retailers from across the globe, more than half (55%) use multiple solutions for last-mile delivery, and a third (33%) turn to crowdsourced delivery.
How Crowdsourced Delivery Works
Crowdsourcing logistics refers to the outsourcing of the distribution work originally undertaken by a company’s internal professional employees to the external public crowd. In this mode, crowdsourced platforms such as Roadie, Amazon Flex, and Uber outsource its delivery duties to private car owners. Doing so can match the needs from regular people in the public and the retailers or package fulfillment companies.
Why Crowdsourcing is a Good Strategy for Retailers and Shipping Companies
As humans, we are prone to certainty and fear the unknow. This makes crowdsourced delivery a good strategy to implement because it provides real-time data and predictability to customers. One factor that hinders retailers from choosing same-day delivery is the shipping costs associated with it. This new delivery model increases the utilization rate of resources and distribution efficiency while reduces social transaction cost. it offers optionality to customers who may want to afford a little extra for same day delivery, which may increase customer stickiness.
It is also a quick and relatively easy way to launch on demand and same-day delivery because it is non-asset based for retailers. Less packaging is used since goods are delivered from the store/warehouse to the customer directly. It also offers the flexibility to meet different scales of demands during different times. Because crowdsourcing companies sync with a network of independent drivers, retailers and shipping companies can get nearly unlimited capacity.
The Disadvantages of Crowdsourced Delivery
However, many crowdsourced delivery platforms usually hire people directly from public with basic requirements. Since the employees are not professionally trained and deliver goods with inconsistent transportation modes, problems like late arrivals, disorderly charges, items lost, and communication mismatch can be prevalent.
The lack of consistency and control for companies that uses crowdsourced delivery can cause damage for its brands. Also, this delivery mode is more suitable in urban areas, where the market density is high with a large number of deliveries and potential couriers.
In addition, despite its cost saving potential, the delivery and ecommerce fee charged by crowdsourced delivery companies can be as high as 35%. This means crowdsourced delivery may not be a viable option for companies in the long run.
With the booming development of e-commerce, the number of packages being transferred daily has surged, and customers’ demand of ultrafast delivery has also increased. Crowdsourcing logistics, as a product of the sharing economy, has become a new employment trend. Crowdsourcing delivery has the natural advantage in solving the "last mile" problem because it integrates the advantages of all parties to meet diversified needs. Everyone can become a "courier" to participate in the last-mile logistics distribution process. It is a relatively economical and efficient mode for the growing high demand of same-days delivery. However, just like about everything else in the world, everything has its downsides. Things like data flow and communications between all parties can still be improved.
With the endless development strategies of express delivery for enterprises, it is inevitable that in the future the crowdsourced delivery market will has its dominant place.
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