Creative Crowdsourcing for Last Mile Efficiency
Crowdsourcing is a growing trend in small parcel delivery. In this increasingly tight and competitive space, both online and brick-and-mortar retailers need to implement more efficient processes not only to compete in the market but also to scale their businesses. Large online retailers are also using crowdsourced deliveries to keep pace with the service and delivery performance of their biggest competitor, Amazon.
How is crowdsourcing used for last mile delivery?
Also known as “sharing assets,” crowdsourcing in the last mile operates on the “hail a cab” principle. Shippers utilize a technology platform to tap into a network of available drivers, providing companies with a flexible, variable-cost solution for speedy last mile delivery without the need for large investments in fixed assets. Amazon’s version of this delivery model utilizes the Flex mobile app to assign drivers routes of up to 60 parcels.
Examples of crowdsourcing the last mile
Although, as usual, Amazon is in the vanguard of this innovation in delivery, other major players are also finding creative ways to apply the principle to increase last mile efficiency. In 2017, for example, Wal-Mart started matching delivery addresses of online orders with its employees’ driving routes. On their way home, the employees deliver packages ordered online.
While Amazon created its own app and WalMart uses its employees, Target looked outward, and in early 2018 bought grocery-delivery company Shipt. In certain zip codes, Target customers can now place an order via the Shipt app or website and receive same-day delivery.
On the carrier side, UPS has partnered with Deliv, a last-mile package delivery solution that employs the sharing economy business model.
Pros and cons of crowdsourcing last mile delivery
Crowdsourcing does increase and provide flexibility in the number of available drivers, but it is not always the most cost-effective delivery solution. At an average rate of around $16–$22 per hour, crowdsourced drivers are not always cheaper than independent contractors working for regional and local carriers. There is also a lot of turnover, meaning that crowdsource delivery platforms need to spend money and time acquiring and training new drivers. For these reasons, many companies prefer to leverage their own fleet of drivers along with crowdsourced options.
The cost-effectiveness of crowdsourcing lies in the increased efficiency it offers, bearing in mind also that meeting customers’ demands for quick delivery will boost customer loyalty and retention, as well as word-of-mouth referrals.
The key is the technology, which can generate algorithms to improve operations. Since the model is extremely flexible, it’s easier to match the supply of drivers to the demand for deliveries. On the other side of the steering wheel, the flexibility is also greatly appealing. Crowdsourced drivers can work when and as much as they want, exercising greater control over their schedule.
Challenges inherent in crowdsourcing
Implementing a crowdsourcing delivery model is not without challenges. A driver who is an employee of a company is more likely to be a reliable worker and better represent the company’s brand. Establishing trust with independent drivers is therefore critical. To reduce the likelihood of using untrustworthy, unreliable drivers, Uber, Lyft, and Amazon, for example, perform background checks and monitor GPS tracking and ratings for each driver.
Also, just as with employees, training new drivers can take several weeks depending on the requirements of the job. Professional drivers frequently run the same routes, so they know where to park at which times of day, where GPS inaccuracies are likely, and how to get into buildings — all of which enables them to deliver more efficiently. The success of crowdsourcing, then, depends at least in part on using technology to standardize delivery processes as much as possible.
The role of technology in crowdsourced delivery
Smart tech is the foundation of this ecosystem. Technology is how drivers are matched with deliveries and how drivers complete their deliveries without error. Features that enhance efficiency and accuracy such as dynamic routing, photo databases of drop-off locations, and specialized services such as signature required are made available on the mobile apps where drivers receive their delivery instructions. Other technologies such as live tracking and chat tools assist operators in managing the crowdsourcing process.
Other ways to deploy crowdsourcing in a supply chain
Looking beyond just tapping into a network of independent drivers, companies are also exploring other ways to creatively apply the sharing approach in their supply chains.
One increasingly popular method is to rent crowdsourced urban warehouse space for easy access to products and fast delivery. In this model, companies can rent space in warehouses in strategic locations that can serve as small-scale distribution nodes. As well as offering a cost-efficient way to store products close to customers, shared warehousing offers the flexibility of increasing the volume of utilized space during peak periods, and then downsizing again during slack times.
Another avenue being explored is fleet democratization. In this model, companies form agreements to tap into each other’s fleets. For vehicle and driver assignment, a smart algorithm crunches all the data and factors in things like capacity, weight, volume, and priority status to achieve higher fulfillment rates and bring delivery costs down. The result is automated and sustainable resource allocation at the optimal rate of resource utilization.
Increasing delivery costs, carrier capacity shortages, and a lack of qualified drivers, coupled with growing consumer demand for speedy delivery, are pushing businesses to find creative and cost-efficient ways to expand and modernize their delivery infrastructure, and many companies are turning to crowdsourcing to optimize last mile delivery.