- Retailers are experimenting with nontraditional logistics strategies and startup partners to solve the last mile delivery problem.
- Insider Inteligence explores what crowdsourced delivery is, why it’s growing, and the future of same-day shipping.
- Do you work in the Transportation & Logistics industry? How about the broader Tech industry? Get business insights on the latest innovations, market trends, and your competitors with data-driven research.
Retailers and their logistics partners have been pushed to meet growing customer demands for increasingly speedy shipping. And the steady rise of e-commerce has caused the daily volume of parcel shipments to skyrocket — two trends that, for the foreseeable future, are only going to continue.
With fulfillment giants like Amazon constantly nipping at their heels, e-tailers have to fight to figure out a way to offer same-day shipping at low prices. To do so, they’re experimenting with nontraditional logistics strategies and startup partners to see what sticks.
Enter crowdsourced delivery — the Uber model for package fulfillment. In this article, we’ll take a look at what it is, why it’s growing, and the future of same-day shipping.
What is crowdsourced delivery?
Crowdsourced delivery is an emerging method of fulfillment that leverages networks of local, non-professional couriers to deliver packages to customers’ doors. While most common in meal and grocery delivery, this model is springing up everywhere as traditional retailers look for ways to cut costs and maximize supply chain efficiency.
Why crowdsourced delivery?
Crowdsourced delivery is beneficial for both retailers and their customers, with the primary advantage simply being that companies can get online orders to their customers faster — sometimes in less than an hour. And with the option of on-demand or scheduled delivery solutions, companies can meet their customers’ demands for instant gratification (which is particularly prevalent among younger, digital-first consumers), while also ensuring that packages are delivered when someone is home — eliminating the additional time and costs involved with multiple delivery attempts.
A secondary benefit of crowdsourced delivery is that it is tech-heavy and asset-light. In the same way that ride sharing drivers use their own cars, contracted couriers provide their own transportation to make deliveries, often from a retailer’s store location, and are typically paid per delivery or per shift. For companies, this means not worrying about warehouse operations, fleet management, or employee benefits — thereby offsetting some of the high costs and complex logistics associated with on-demand delivery. Even the bigger players are getting in on the action; Amazon—despite its already massive logistics network—has dipped into this model to expand its reach further through Amazon Flex.
For customers, crowdsourced delivery provides greater control over the shopping experience; it satisfies their need for speed while offering more visibility into the delivery process. Customers can select a desired time slot to ensure they won’t miss a delivery and, perhaps most importantly, they can track their packages along the way. Instead of repeatedly checking a tracking code for a status update, customers can choose to receive SMS text alerts, push notifications, or even GPS tracking on their smartphones.
Despite these benefits, the startup nature of many crowdsourced delivery services comes with inherent challenges, such as the high per-delivery costs of ad-hoc shipments, which are often absorbed by the retailer as customers become less and less willing to cover delivery fees.
As with other startups tapping into the gig economy, other major challenges of crowdsourced delivery include workforce issues — more specifically, courier shortages and retention rates. Couriers are often signed up for multiple gigs, which can make localized labor hard to come by at times. When contractors toggle among delivery, ride hailing, and other on-demand service apps looking for the next available job, they can quickly cause churn for the company from burnout, particularly when regular wages and benefits are not guaranteed.
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Solving the last mile problem
In traditional shipping, the last mile problem is the inefficiency of final delivery. The “last mile” of delivery refers to the final leg of shipment, when a package arrives at the customer’s doorstep. This step of the journey is the most expensive and the most time consuming, as there are typically multiple stops along a given route — slowed down by either long distances between stops in rural areas or heavy traffic in urban settings.
Crowdsourced delivery attempts to skirt the bottlenecks of last mile delivery by tasking someone local to both the package’s origin and customer’s door to expedite fulfillment and elevate customer satisfaction.
Future of same-day shipping
To date, crowdsourced food delivery has been most commonly seen in meal delivery services in urban markets, with apps such as Postmates, Doordash, and Grubhub, but even giants like Walmart and Aldi have begun dabbling with this model for same-day grocery delivery.
Crowdsourced delivery is not limited to the food and restaurant industries either. A growing number of retailers is now experimenting with crowdsourcing as a solution to same-day shipping — an expectation of 56% of millennials, according to a survey from fraud prevention startup Trustev.
In May 2020, Target acquired the proprietary batching and order routing technology from same-day delivery startup Deliv. And though the retail giant didn’t immediately implement the tech into its operations, it has used it in research and development to improve its own delivery processes.
These types of technologies have been eliciting a response from traditional delivery providers such as DHL which launched a same-day scheduled delivery pilot for retail shipping in Germany, or FedEx, which has expanded same-day urban delivery in over 30 markets. Unlike emerging startups, these legacy providers have the advantage of leveraging their extensive logistics operations (traditionally used for non-retail deliveries), and shifting them to compete in the retail space.
And as we continue to see advancements in drone technology and artificial intelligence, it’s likely that in the future, last mile delivery will no longer depend on local couriers, but rather automation.