Using Crowdsourced Delivery as a Shortcut to Last Mile Growth

Californians’ passing of Proposition 22 to keep the status of crowdsourced drivers as independent contractors sent a powerful message about the future of the gig economy. The proposition was put forward by Uber and its associates, but it was consumers who voted to ensure the survival of companies like Uber, Doordash, Postmates and other crowdsourced fleets. People today value flexibility in everything – in how they work, where they shop, when and how they get things delivered.

But despite the vote of support from consumers, and the subsequent projected adoption across industries, crowdsourced delivery may not be the right last mile solution for every retailer or brand.

Top reasons to work with crowdsourced delivery fleets:

  • A quick and relatively easy way to launch on-demand and same-day delivery
  • Directly scale delivery operations up and down as needed
  • Meet peak demand during especially busy times or in specific locations
  • Satisfy customer needs in terms of delivery speed and availability
  • Eliminate much of the effort required to create, staff and run delivery operations
  • Create a stop-gap measure until you can fully build out your delivery network or internal delivery solution.

A Strategic Growth Channel for Last Mile Delivery

While only 9% of retailers are using crowdsourced providers now, one in four retailers plans to start using them in the next 12 months.

Crowdsourced delivery is a system of employing contractors to carry out deliveries using their own vehicles, going from warehouses, stores or fulfillment centers to the customer. The model began with ride-sharing and branched out into food delivery, but it’s now being adopted across multiple verticals to address issues of speed, cost, convenience and efficiency.

Why businesses are turning to crowdsourced delivery services

  • Many shippers are trying to solve their last mile delivery challenges by using third party providers for at least some of their deliveries. In certain situations it can prove to be the fastest, most scalable solution because it provides an on-demand, scalable pool of delivery drivers. This is particularly helpful for same day delivery, when you need online orders delivered at a moment’s notice.
  • Simple and Fast – Delivery logistics are notoriously complex, and outsourcing the process to another company – especially outsourcing the work of dispatching to and managing drivers – helps companies quickly offer customers the convenient online order fulfillment that they’re looking for.
  • Many businesses, particularly restaurants and grocery chains, turn to dedicated crowdsourced delivery providers to provide the services they lack – for example, same day delivery options – while they gradually transition to their own, in-house delivery service. Alternatively, an internal or other contracted fleet handles the regular delivery volume, with a crowdsourced delivery fleet can be brought in to handle capacity overflow (for example, during busy lunch runs in restaurants, or during peak retail season.)
  • The financials – Unlike traditional delivery, where a business shoulders the cost of their own fleet, crowdsourced drivers are expected to provide their own vehicles.

Because crowdsourced drivers are typically contractors, businesses also save on social benefits, which are quite significant in many regions. You will typically pay each driver per delivery and rarely pay for downtime between deliveries, or for the first leg of the journey (the time or miles they cover picking up a delivery order). This can substantially lower your cost to deliver.

How crowdsourced delivery works

The most common model for crowdsourced delivery is working with delivery companies that manage a fleet of crowdsourced gig workers and offer crowdsourced delivery as a service. While some providers offer white-labeled delivery as a service (deliveries appear to come from the merchant), many notable providers, such as UberEats, have established strong, customer-facing brands of their own.

Many providers with strong customer-facing brands also offer ecommerce marketplaces that can help expose a wider audience to the business’s products. On the flip side, marketplaces generally place the business and its products alongside its competitors, thereby directly commoditizing its offering.

Major trends: Moving from marketplaces to DaaS

Many crowdsourced fleets are actually marketplaces – think Uber Eats, Postmates and Doordash – which employ gig workers to perform the delivery.

While this model helped brands – particularly restaurants – quickly launch delivery, it has its drawbacks. Customer data stays with the marketplace, and brands lose ‘stickiness’ with their customers. Along with this concern, the marketplaces themselves looked for new business models that would help them expand.

Enter Delivery as a Service (DaaS), which is going to prove transformational in 2021- in particular for the retail sector. While only 9% of retailers are using crowdsourced providers now, one in four retailers plans to start using them in the next 12 months.

Omnichannel crowdsourced delivery

Churn is a serious issue for gig economy companies. While many gig economy drivers are happy to maintain their independence, doing deliveries for a single company doesn’t always pays the bills.

This is a major caveat in crowdsourced work, but it can be mitigated by enabling a delivery person to work for multiple companies at once – or alternatively, for crowdsourced platforms to provide multiple services.

This issue is one reason why companies like Doordash and Postmates branched out from serving one initial industry, to offering delivery services across the retail spectrum. Similarly, Uber expanded from its initial ride sharing services to the Uber Eats platform, and now offers courier, freight transportation, and package shipping services as well.

Crowdsourced Grocery Delivery

Until recently, many grocers relied on a single crowdsourced solution for their delivery. In the U.S., this is most often Instacart. But the industry has been disrupted by three major changes:

1. The overnight adoption of online ordering thanks to Covid 19
2. The realization that Instacart has a monopoly on the customer experience
3. Strong competition in the form of a one-hour delivery service and curbside pickup from grocery giants like Amazon’s Whole Foods and Walmart.

Grocers understand they need to do more than just deliver via a single crowdsourced company. They need to diversify their fulfillment services and their delivery partnerships in order to cost-effectively meet capacity, as well as the high bar customers have set for grocery fulfillment.

Is Crowdsourced Delivery really the best option?

While this delivery channel provides companies with significant advantages, there are also many challenges.

Crowdsourcing by its nature demands rethinking both branding and control.

Reliability – Third party deliveries cannot typically be compared to those performed by the company’s own employees due to training and control issues, especially when it comes to culture, standards, speed, safety and product knowledge.

Read: Third Party Delivery Done Right: Why We Built a Delivery Network

Branding – Companies want to provide a consistent customer experience – not to mention the ability to offer coupons, promotions or giveaways. But maintaining control, consistency and branding gets complicated when using external fleets. The problem is that the brand customers meet at the doorstep isn’t yours – it’s the brand of the delivery fleet. That’s why this delivery channel by its nature demands rethinking both branding and control.

Data – Even when using DaaS fleets, companies should be able to provide real-time data for dispatchers, support and delivery users, as well as maintain control over customer data and post-delivery feedback. This is a must have because without reliable data, actionable insights and optimization are nearly impossible.

Location – Using bike, foot and motorcycle fleets can lower costs and speed up deliveries in urban areas, where there is a high market density with a large number of deliveries and potential couriers. However, suburban and rural markets often require a different delivery system because they don’t have a similar concentration of activity.

Traffic is another consideration – since each driver uses their own unique vehicle, it’s harder to guarantee you’ll get drivers with motorcycles or bikes to beat traffic.

Payments – Reconciliations, tips and payments need to be handled differently for drivers who aren’t integrated into the company’s systems due to the lack of proper communication and the necessary data flows.

The cost– While crowdsourcing makes sense in certain situations, the fees typically cut deeply into the financial viability of delivering. Crowdsourced delivery companies typically charge a fee for both delivery and ecommerce (when available). When both of these services are used, the fees can be as high as 35% of the total order value. That’s one reason why this delivery solution often costs more over time than using an in-house fleet.

Crowdsourced Delivery in Retail

The use of crowdsourced fleets is growing; as mentioned above, one in four retailers expects to launch this solution within the next twelve months. However, not all brands or delivery types are best served by crowdsourced solutions. Premium retailers will often want to provide a premium delivery experience — one that is branded and executed by a well-dressed delivery representative. These representatives might also be required to provide on-site services such as installation, setup, upselling warranties or user education. While this can be crowdsourced, the specialization required often leads retailers to take this operation in-house or to work with a trusted outsourced fleet.

Technology Is Making Crowdsourced Delivery a More Viable Model

With the rise of crowdsourced delivery services comes a need to better manage them, as well as managing multiple fleets in general – internal alongside external – for maximum operational flexibility.

Brands must also be able to measure delivery performance and customer satisfaction for the orders going out – including on time delivery rates – in order to make informed decisions, and adjust their use of these fleets accordingly. Only by maintaining visibility over the entire supply chain and the supporting ecosystem can brands truly deliver on the high-quality customer experiences that help them generate sustainable growth.

Maintaining this level of quality, visibility and control over any external company requires a dedicated technology layer. Technology can make it possible for businesses to embrace delivery through a variety of companies — tracking, managing, optimizing and scaling their delivery operation while enjoying the ability to control driver flows, measure driver performance, understand customer satisfaction and collect customer feedback. Dedicated reporting dashboards should provide real-time alerts, timely insights and the top-level reporting needed to make critical business decisions.

The right technologies can even ease the process of training a constantly changing delivery team — walking them through the processes they need to execute not only to ensure they fulfill their jobs as needed, but also to enhance their experience and help retain them. By helping crowdsourced drivers do their jobs better, this technology layer helps businesses deliver quality customer experiences, even when deliveries are performed through external people.

Today, eCommerce fulfillment technologies and delivery platforms can provide brands with the visibility and control they need to scale up and optimize delivery with crowdsourced fleets.

How to manage crowdsourced delivery through technology:

  • Consolidating crowdsourced delivery management with all other delivery models on a single, centralized platform
  • Dynamic dispatching of on demand delivery orders
  • Apps that provide real-time visibility for orders across the supply chain, including over deliveries performed by crowdsourced companies
  • Comparing performance to make better financial decisions
  • Dynamically expand or retract use of crowdsourced fleets based on peak demand (seasonal/hourly) or used in tandem with internal fleets to cover peak demand only
  • Customer apps which notify customers when orders have been sent out, track where they are, and support contactless proof of delivery.
  • Using driver apps for communication and managing the delivery flow
  • Define and enforce delivery timing, quality and customer satisfaction SLAs with every outsourced delivery partner
  • Alerts for customers and operational managers when deliveries are running late

Crowdsourced delivery also offers businesses a unique solution to the ever-present balancing act between ensuring customer satisfaction, handling the peak delivery rush and managing expenses. As businesses explore whether this is the right delivery option for them, they must ensure that any delivery model they adopt allows them to manage and coordinate the entire delivery operation across every provider or platform without forfeiting control, and also keep control over the customer relationship.

With the right technology stack in place, businesses can effectively and dynamically manage every process — and person — associated with their delivery operation across both in-house staff and crowdsourced delivery contractors.

Bringg’s platform helps companies dynamically engage crowdsourced fleets for last mile delivery, with full visibility and ownership over the customer experience. Our delivery networks’ deep integrations provide instant access to the world’s leading delivery providers and over a million drivers across the globe. Innovative orchestration technology allows brands to manage these external fleets seamlessly with your current operations as if they were internal resources.

Read up on our delivery network, or reach out to a Bringg representative to learn more.

About Author

Zahava Dalin-Kaptzan

Zahava

About Author

Zahava Dalin-Kaptzan

Zahava is a marketing manager at Bringg, with a unique take on delivery and retail trends. She has extensive experience in analyzing disruptive technology and its impact on both markets and enterprises.

Discover what Bringg can do for your business