Analyst Insight: Despite questions surrounding crowdsourced delivery, it continues to grow as customers demand faster service. Whether they choose to offer it as an additional delivery option or the only choice, shippers will need to consider its costs, as well as decide how it fits strategically with the rest of the business.
Customer expectations for faster and more flexible delivery continue to grow, and are putting pressure on traditional delivery networks. Demand for same-day delivery is forcing traditional retailers to come up with creative solutions. In addition, they’re faced with competition from Amazon, which is taking a progressively larger share of the retail market.
The biggest benefits of crowdsourced solutions are lower cost and flexibility — the ability to ramp capacity up and down on short notice, and more easily match supply with fluctuating demand. However, there are growing questions surrounding crowdsourced solutions, including reliability, regional differences in policies and regulations, and brand consistency.
Reliability can be an issue if it isn’t managed correctly. Depending on city or region, Walmart uses several crowdsourced delivery companies such as Postmates, Instacart and DoorDash. To manage the various companies, Walmart uses an in-house platform which allows drivers to sign up for windows of time that work best with their schedules. It also provides order details and navigation assistance, among other support services.
Amazon’s crowdsourced solution, Flex, also utilizes an online platform to manage operations and push opportunities and delivery windows to approved drivers’ smartphone apps.
New government policies and regulations are popping up to set limitations on crowdsourced delivery services. In California, for example, a law set to take effect in 2020 mandates the reclassification of many contract workers to employee status. The law could have an impact on crowdsourced delivery companies operating within the state. A coalition of labor groups is pushing for similar legislation in other states, while in New York City a minimum wage for ride-hailing drivers was passed in 2018.
Brand consistency could be jeopardized when partnering with crowdsourced delivery companies. Many providers don’t see the value proposition in training on shippers’ brands. For those delivering unique or specialized items, there might be a placard on the vehicle with the shipper’s name, or the delivery person might wear a uniform to signify that they’re delivering on behalf of a particular shipper. However, for some shippers such as grocery stores, brand consistency might not be as important.
It’s worth noting the existence of specialized crowdsourced delivery companies. One such entity is Roadie. The company works with the likes of Home Depot and Delta Airlines to deliver Christmas trees and lost or delayed luggage. Another example is Deliv, which offers same-day delivery service to mall shoppers.
Crowdsourced delivery might not be the solution for every shipper, but when used strategically, it provides a lot of value.
A recent report estimates that 90% of retailers expect to use crowdsourced delivery to handle select orders by 2028. As delivery times become faster, the need for such services as an additional option to existing solutions, or for specific cities and regions, will grow. Shippers will need to study the costs associated with the service to ensure that it’s a strategic fit with the business.