Should More Retailers Crowdsource Last-Mile Deliveries?

(This article was first published on LinkedIn. We updated this version for recency and relevance.)

"Hi, AIMS Industrial Supplies! I’m ready to place my order. Is there any way you can deliver it today?”

This is a common question that our customers ask, and there is no straightforward answer that warrants a place on our FAQ list. 

The dilemma: The customer wants to receive his order fast, but the retailer and its logistics partner cannot move it right now, often due to “last mile inefficiencies” and limited capacity. 

It often begs the question ...

Is it time for more retailers to crowdsource deliveries? 

To those not familiar with the term, crowdsourcing deliveries is when a business uses a digital platform to contract on-demand couriers -- often on an “as needs, ad hoc” basis – to fulfill their delivery obligations as an informal third-party logistics provider. 

(Informal means they are not considered a formal business partner with a service level agreement.) 

Broadly speaking, it’s like the Uber for anything delivery. In fact, as I’m sure you know, Uber has also ventured into this market, initially with food and now with general parcels. 

Why consider crowdsourcing deliveries; specifically in the last mile? 

One of the main reasons is because the customer is not used to waiting long anymore: 

• He wants his order received as soon as possible under reasonable circumstances.* 
• He is going to do more online shopping in the future.* 
• He wants to track the order status in real-time. 
• He just really needs the product right here, right now.** 
• If the retailer cannot commit to deliver fast, the customer can easily shop elsewhere. Of course, the retailer will try to avoid that scenario. 

*McKinsey & Company: Retail speaks: Seven imperatives for the industry

**In our retail business, we sometimes have to go out of our way outside regular business hours to expedite order fulfilment to manufacturing clients who just can’t afford unexpected downtime due to equipment failures. 

Since the pandemic instigated the e-commerce boom, more customers are expected to keep on shopping online, even when physical stores have reopened. 

Retailers can fairly assume that fast fulfilment used to be a “nice to have”, but now it’s imperative. 

Unfortunately, traditional logistics models are still playing catch-up to fully and efficiently accommodate such an unprecedented surge in logistical requirements, especially in their last-mile delivery networks.

Suddenly, crowdsourcing the last mile journey becomes an attractive alternative to traditional logistics.

Benefits and risks of crowdsourcing the “last mile” 

The upsides for retailers:

• They can easily scale their delivery capacity up or down by using on-demand couriers. This is especially important when there’s a surge in demand. 
• They can keep on moving out orders from the warehouse to the customer’s door. 
• There is no (or just a small) fleet of delivery vehicles to maintain and operate. 
• There are fewer logistics workforce requirements. 
• There is less warehouse congestion because products are moved out faster. 
• There are fewer failed delivery attempts, because the retailer is sure that the customer is at the shipping address to expect the parcel. 
• There are fewer stops along the way. For example: A small truck courier handling multiple last mile orders may have more stops compared to a motorcycle courier with just a handful orders. 
• The customer will be delighted to get his parcel fast. 

The downsides for retailers: 

• They may have to cover the higher cost of small volume, ad hoc shipment, since customers are not always willing to absorb it. 
• There may still be a limited supply of on-demand couriers in the area, hence they may have to pay higher fees, especially at peak times. 
• They are letting non-professional couriers handle the final and crucial phase in order fulfilment. 
• Couriers may not always be exclusively handling your shipment (eg. she's handling multiple orders). 
• Couriers may be doing multiple delivery gigs at a time. 
• Diligent company drivers can return important customer information a ‘hired gun’ will never pick up 

Is crowdsourced last mile delivery for you? 

From a retailer’s perspective, it’s best decided on a case-by-case basis, depending on the specific order. 

You might have to factor in these circumstances, assuming that you have on hand the product in question: 

1. Does the customer really want the product delivered faster than your standard lead time? 
2. Does the customer mean “same day delivery” and not “same day despatch”, where the retailer hands over the product to their logistics partner? Some easily confuse the two. 
3. Does the customer want to consider picking up the item from the warehouse/store? 
4. Is the customer’s shipping address within driving distance of the retailer’s warehouse? 
5. Is the product fragile? 
6. Is the product classified as a dangerous good? 
7. Does the product have special handling requirements? 
8. Can the product fit in the on-demand couriers' vehicle?  

Crowdsourcing the last mile is not a new thing. In fact, there were crowdsourced delivery start-ups already serving Australian businesses and customers even before the pandemic. 

It’s good to know you have the option to toggle it on and off, depending on your and your logistics partner’s capacity and market demand. 

At least, it’s a trend worth observing.  

Even the big guys are already doing it. For example, in the US, Amazon is already growing its Amazon Flex crowdsourced delivery network in more than 50 cities. 

Are you considering to crowdsource your last mile delivery? 

As a customer, would you like an on-demand courier to deliver your parcel?