While traditional delivery providers usually rely on long-term contracts, crowdsourcing models combine per-delivery payments and mileage rates. For example, Roadie rewards drivers for every delivery made, while Grubhub pays per-minute drivers for the duration of their active delivery. Another crowdsourcing service, Amazon Flex, delivers drivers based on their scheduled work time. Both of these models use technology to reduce driver errors.
Crowdsourced last-mile delivery startups have some challenges, however. Because couriers sign up for multiple gigs, they can burn out quickly and not receive regular wages. Plus, they often need more control over how customers receive their final deliveries. For these reasons, many furniture retailers are skeptical of crowdsourced last mile delivery.
Benefits
For businesses that need on-demand last-mile delivery, crowdsourcing is a great solution to overcome logistical bottlenecks. While crowdsourcing does not replace traditional delivery methods, it can significantly improve them. For example, crowdsourcing can help you overcome inventory management challenges and handle hot shot shipping runs when a customer orders a particular product that is not available in your store. It is also a good option for retailers with a high return rate online.
Another advantage of crowdsourced shipping is that it is entirely digital. The contracted couriers will typically provide their transportation, and they are usually paid per shift. It eliminates the need for in-house drivers, which can lead to high costs. Crowdsourced shipping will also give you better control over your shopping experience, as you can choose when and where your packages are delivered.
Challenges
Crowdsourcing is a promising method of last-mile delivery, which can significantly cut down on out-of-pocket shipping costs for retailers. It also allows customers to schedule their deliveries and provides real-time traceability.
Although crowdsourced delivery has gained momentum in urban areas, this method still needs to overcome several challenges. These challenges include a need for more financial incentives, a lack of geographic coverage, and the increased effort required to reach remote areas.
The benefits of crowdsourcing are many, including reducing the need for a fleet of vehicles. However, there are also significant challenges, which include using independent contractors and varying demand.
Business Model
Crowdsourced last-mile delivery works much like ride-hailing does: it uses an extensive network of independent delivery drivers and vehicles to meet the needs of consumers. While crowdsourced last-mile delivery is fast becoming a popular business model, it’s not without its challenges. First, the cost of maintaining an extensive network of facilities, vehicles, and staff can be a substantial burden. Second, most customers want to avoid paying for last-mile deliveries, which adds to the overall cost of the process.
Crowdsourced last-mile delivery has many advantages, including increased flexibility and cost-efficiency. Drivers are often independent contractors, which saves on fleet costs and social benefits. Moreover, crowdsourced delivery reduces delivery costs by tapping into unused space in vehicles.
Costs
Crowdsourced last-mile delivery offers many benefits, but there are inevitable costs involved. While crowdsourcing makes sense in some circumstances, it can be prohibitively expensive, especially for ecommerce businesses. Crowdsourced last-mile delivery companies typically charge a fee to perform the delivery, which may amount to as much as 35% of the total order value. As a result, crowdsourced last-mile delivery costs more than an in-house fleet.
Companies can increase shipping volumes while still ensuring fast deliveries. By crowdsourcing last-mile delivery, companies can meet consumer demand for speedy deliveries without incurring the costs of delivery vehicles and workforce training. However, the costs involved must be carefully considered. If crowdsourced employees are not up to the job, companies can risk a negative impact on their brand. They must also carefully assess workforce management issues and customer service performance.
Conclusions
The crowdsourced last mile delivery market is still in its early stages, but established retailers are taking notice. Startups, such as Roadie, aim to make the most of space in cars by recruiting drivers who are already heading in the right direction. Others, like Ourbus, focus on crowdsourcing commutes. As the market grows, more established retailers will likely want to consider this strategy.
