The Role Of Crowd Shipping In Controlling The Increasing Last-Mile Delivery Costs

Amazon’s obsession with their customers and the revamped last-mile delivery standards are about to disrupt the industry. Once again. Whenever we talk about the delivery guys, the ones from Amazon Prime have the best impression on our mind- Exceptional service, careful handling, and friendly. This raised the bar for the traditional logistics companies, but as the number of deliveries grew, another factor increased too- last-mile delivery costs. Ever since they launched Amazon Prime, the delivery costs are skyrocketing, especially due to the same-day deliveries, and the ecommerce giant might need to double their subscription prices if they want to make their operations sustainable. 

Regardless of how it deals with the situation, this isn’t good news for the independent ecommerce store owners. It was already costly for them to provide delivery services at par with giants like Amazon. But, there’s an emerging concept that can help fight back the surging last-mile delivery costs, and perhaps, even the smaller online stores can benefit from it. We are talking about crowd shipping. It refers to partnering with the residents of an area and executing doorstep delivery with their help as they move around during their daily activities. Let us see how crowd shipping can curb the increasing costs of delivering parcels.

Why Crowd Shipping?

To understand why crowd shipping can turn into a major breakthrough, let us dig deeper into its impact on all of its stakeholders. Firstly, the businesses can use a crowd shipping aggregator to distribute the finished products through common citizens instead of a logistic company that uses dedicated delivery vehicles and staff. Since the common people are anyway going to travel through the city at the location of their choice, there’s virtually no cost for carrying an additional parcel on their bikes/cars along with them. 

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Getting even a small amount for carrying the package will be a good deal for them, and it will help them lower their transportation costs. Thus, the businesses shipping through them can get their work done without hiring specialized delivery partners. Plus, they don’t need to depend on any single entity. All they need is to find a mediatory platform that coordinates with people who have registered for crowd shipping and track the package’s location and how it is being handled. 

Which Concerns Need To Be Addressed While Implementing The Crowd Shipping Model

A lot of aspects like rating the crowd shipping partner’s service, confirming the availability of storage space in their vehicles, their route planning, and establishing mutual safety for parcel and handler need to be taken care of. But once implemented, this solution creates a win-win situation for all stakeholders. Even if the same person isn’t going all the way down to the final dropping location, they can always pass on the package to the next crowd shipping carrier and continue with their daily life. 

Maintaining the entire operations’ reliability remains a major concern, and this will require a lot more than just an app. This includes infrastructure level planning with provision for easy and fast swapping of storage containers, sensors to monitor and track them, payment systems, and coordination deliveries. It will also require integration with GPS solutions like Google Maps and media monitoring for routing management.

I find this approach amazing since it’s highly scalable apart from being cost-efficient. You will get access to crowd shipping partners in proportion to the population, making scalability a natural outcome. Even if their vehicle faces a breakdown, any nearby partner passing through the same route can be assigned with the parcel. This will keep the pressure on the supply chain to a bare minimum regardless of the number of deliveries in most cases. 

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Crowd shipping

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Which Areas Does Crowd Shipping Help Improvise

To better understand how this model impacts the supply chain, let us focus on the different aspects of last-mile fulfilling:

Routing

The crowd shipping aggregator app installed in the delivery partner’s smartphone will act as the navigation tool like in the case of Uber. But the major difference, in this case, will be the fact that it will provide routing suggestions and prompt the user when they need to take a brief stop while the storage compartments are swapped. It will allow the users to coordinate during the process and alert any alternate delivery partner nearby in case the one carrying the parcel isn’t able to continue with the route. The app will also share live location details for monitoring purposes. 

Reverse Logistics

Reverse logistics is a costly affair for every ecommerce brand, and crowd shipping can help them reduce the losses associated with product return by providing a faster alternative at virtually the same costs as the regular delivery. Since there is no dedicated carrier involved, the shipper can get the products picked by a nearby delivery partner like regular parcels without paying any premium on top of the normal pricing.

Tracking Inventory In Transit

Live tracking of the inventory also helps control the costs as the ecommerce company can divert the goods to alternate buyers in case of cancellation/return. This can prove to be largely beneficial for the food and beverage outlets as well as brands selling their products in metropolitan areas where demand is consistent. Moreover, it will also aid in making better selling decisions.

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Shared Warehousing

Just as commuting, you can also use the residential spaces of your users to store the products. This might require additional infrastructural facilities for surveillance, but it can solve the problems created by the rising scarcity of urban fulfillment centers while making it easy to store shipments in remote areas as residents can lease their real estate over there. Thus, shared warehousing can bring down the cost of last-mile delivery by providing a model similar to transportation- using the properties owned by local residents.

Summing Up

Thus, we can conclude that crowd shipping will employ a multi-faceted approach to cost optimization by aligning businesses’ interests to that of the local residents. It will revamp our existing approach to inventory management and warehousing as well. This is a sustainable model when compared to the existing one as it will lower the shipping prices, which are ultimately borne by the users living at the same location, while also reducing their commuting costs.

Neel

Neel is a creative who's always ready to lay his hands on anything that is innovative and captures masses. He is currently working with Orderhive. Apart from technology and business practices, he drools over psychology, history, and cinematography. You can find him on hiking trips, talking over anything from alien belief systems to 90's cartoon shows.

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