Learn how to use last-mile delivery to build brand awareness, and create a delivery experience that generates brand value and recognition.
Crowdsourced Delivery: Benefits & How It Works
In this guide, we’re going to show you what is crowdsourced delivery, how does it work in last mile delivery, and the benefits of using crowdsourcing.
This is a complete guide to crowdsourced delivery.
In this new guide, we’re going to show you:
- What is crowdsourcing in last-mile delivery
- How crowdsourcing works
- The benefits of using this type of delivery
So if you want to:
- Build a delivery from scratch
- Take advantage of the gig economy to grow and scale
- Meet seasonal demand with a highly flexible delivery fleet
- Offset logistics costs with minimal assets and investments
Then you’ll enjoy this guide.
Let’s get started.
What is crowdsourcing in last-mile delivery?
Crowdsourcing delivery is a method of employing private contractors to outsource delivery. Crowdsourced delivery agents use their vehicles to pickup and drop-off orders to customers, transporting them from stores, warehouses or fulfillment centers to the customer’s doorstep - the last mile of delivery.
Common crowdsourced delivery services employ a variety of agents, from bicycle riders to van and truck drivers.
Why are businesses turning to crowdsourced delivery?
Crowdsourced delivery is significantly more flexible than many other ways of outsourcing delivery (like carriers or 3PL providers).
So much, in fact, that some companies are crowdsourced delivery service providers to other local and nearby businesses.
The #1 thing that makes crowdsourced delivery more effective than other types of fulfillment outsourcing is that you have an adjustable delivery fleet at your disposal.
A crowdsourced delivery fleet has variable cost options and technically unlimited capacity.
Low entry barriers
Crowdsourced deliveries are asset-light.
If you’re looking to offer delivery services to customers, you don’t have to invest a lot of capital.
Contracted couriers transport orders using their own vehicles. They can pick them up from any location, even a physical store. And they get compensated per delivery or per shift.
So other than paying the delivery fee, you won’t have to spend money on vehicles, support staff, employee benefits, and other overhead costs.
This helps to offset some of the high costs related to the logistics of last mile delivery.
Simple and fast to set up
This is a big deal if you’re a small business owner or you’re just starting to offer delivery to customers.
When a new delivery request comes in, you can contract a single courier to carry out that specific delivery.
That’s simply not the case with carriers, 3PLs, 4PLs… or any other external delivery fleet.
And to hire a delivery agent, you can use crowdsourcing delivery platforms and apps like DoorDash, Uber, or Postmates.
This enables you to easily and quickly enroll drivers or couriers to deliver as many deliveries as you have pending.
This brings us to our next point…
Easy to scale up and down
With crowdsourcing, you get a highly flexible fleet.
Because you contract delivery agents per order (rather than having an internal fleet), you can easily scale up or down the number of deliveries you can fulfill.
For example, you can do this during high seasonal demand.
All you need to do is use a crowdsourcing platform to hire more delivery agents.
And once demand drops, you can return the fleet to its previous size.
Or scale it down even more.
And you can do this at any time when delivery demand exceeds the capacity of your fleet.
A seamless transition for in-house delivery
Typically, a lot of small businesses rely on crowdsourced delivery to outsource fulfillment.
As the demand for their services grows, this enables them to easily scale up their delivery.
Rather than raise capital expenditure (CapEx) to build a fleet, with crowdsourcing, you raise operational expenditure (OpEx).
By doing this, you can fill in the gaps to meet capacity overflow while not investing too much money until the delivery becomes profitable.
As you grow, you can scale up the size of your crowdsourced delivery fleet until you raise enough funds to gradually transition to an in-house delivery.
But you can use a dedicated crowdsourced delivery provider to expand your delivery offer.
For example, you can use the speed of crowdsourced delivery to provide same day delivery options to customers.
That’s because this type of delivery also provides you with:
Greater delivery speed and availability
People want hyperlocal and local delivery services.
In fact, hyperlocal goods delivery is estimated to grow 20.7% in the next six years (Allied Market Research).
This makes crowdsourced delivery a good opportunity for SMBs to fill the market gap.
On the one hand, local businesses can use crowdsourcing to raise delivery speed. And provide the fast delivery options (that we’ve mentioned).
This can also help you to stay competitive. And even compete with Amazon delivery by simply coexisting with them.
On the other hand, it makes your delivery service highly available.
Thanks to the rise of the gig economy, you have easy access to dedicated providers or freelance delivery agents and drivers via crowdsourced delivery apps.
This means you can contract more of them quicker, because:
There is a near-infinite workforce at your disposal ready to deliver your goods to customers (almost) 24/7.
Challenges of crowdsourcing delivery
Despite the benefits of crowdsourced delivery for your business, it doesn’t come without its challenges.
The biggest challenge for you will be:
Maintaining consistency and control over your last-mile delivery.
So there is a real need for you to rethink it based on the nature of crowdsourced delivery.
Especially in the following categories:
Branding consistency doesn’t come easy with crowdsourced delivery.
Since you hire outside staff, it’s NOT YOUR BRAND that they’re representing.
The only thing you can do is to white label the apps customers use to order goods.
Or use custom packaging to get your brand message through to the customer.
The bad thing is:
Even though crowdsourced delivery agents are not your direct representatives, people still associate them with your brand.
If your customers have a bad experience, they’ll blame your company for it.
And that may have a VERY negative impact on the reputation of your brand.
You risk mistakes, missed or late deliveries.
In fact, almost 60% of shoppers don’t want to wait more than 40 minutes for their delivery to arrive, according to delivery statistics.
So having some level of control over your crowdsourced delivery is critical for maintaining a strong brand reputation.
Otherwise you can harm the way customers perceive your brand.
Contracted delivery personnel typically don’t provide the same level of customer service as in-house delivery staff.
This comes down to their lack of training and management. Especially when it comes to:
- Company culture
- Delivery norms
- Speed of delivery
- Safety on the job
- Knowledge of the product line
This can have a negative impact on customer experience, as well.
Four in five people value friendly services (77%) and knowledgeable services (79%) when it comes to a good customer experience. (PwC)
In cities, there is a high market density and a lot of available delivery agents to crowdsource.
You can also hire a mix of people and create a fleet of mixed delivery vehicles.
From couriers who deliver on foot, though bikes and electric scooters, to cars and vans, this makes it easier to do efficient delivery routing in urban areas.
But this is NOT THE CASE with suburban and rural markets.
Here, there are frequent shortages of available workers to crowdsource.
(Especially when it comes to meeting peak seasonal demand).
This can cause you to have a separate delivery system in place. Which only raises your overhead.
Crowdsourcing delivery makes sense if you’re just starting a food delivery or offering home delivery for the first time.
In the long-term, though, OpEx can eat into the financial feasibility of your delivery service.
The fact is outsourcing fulfillment or crowdsourcing delivery is EXPENSIVE.
Fees can be as high as 35% of the total order value.
One way to deal with the high overhead is to raise prices or set up a minimum order value.
But this makes your delivery less competitive which lowers churn.
That’s why in the long run, your business should look to transition to an in-house delivery system as soon as possible.
Access to data
With crowdsourced delivery, you should be aware of one final thing:
You WON’T have access to data.
This includes both operational data, such as key metrics in delivery logistics.
But also consumer data, like delivery feedback, driver ratings, or other information about the customer experience.
You will essentially lack meaningful insights about the performance of your delivery.
Which makes it difficult to continuously improve and optimize your delivery service.
How does crowdsourced delivery work?
The most basic model of crowdsourced delivery is to hire gig workers to perform delivery as a service.
But this isn’t the most common type of crowdsourcing delivery.
Typically, businesses contract crowdsourced delivery providers.
Providers manage a fleet of gig workers and offer crowdsourced delivery as a service to your company.
With this model, you sometimes have the option of white-labeled delivery as a service.
But in recent years, notable crowdsourcing providers such as UberEats, Postmates, and DoorDash have a strong customer-facing service with a strong audience among SMBs.
As for how crowdsourced delivery works, it typically follows these five stages:
Stage #1: A customer placed an order on your website
Stage #2: You receive the order and prepare it for delivery
Stage #3: You contract a crowdsource provider or gig worker
Stage #4: The crowdsourced courier picks up the shipment
Stage #5: He delivers the package to the customer and gets paid
Examples of crowdsourced delivery
These are typical third-party logistics companies and carriers that have crowdsourced delivery as part of their offer.
Working with delivery companies that manage a fleet of crowdsourced gig workers and offer crowdsourced delivery as a service is the most prevalent model for crowdsourced delivery.
Even though some crowdsourced delivery services provide white-labeled delivery others, such as UberEats, have developed their own customer-facing branding.
Many companies with strong customer-facing brands also offer e-commerce marketplaces, which can help expose their items to a wider audience.
Marketplaces, on the other hand, typically position a company’s products alongside those of its competitors, effectively commoditizing its offering.
Crowdsource delivery is regarded as a trend that is here to stay in addition to accelerating fulfillment and keeping consumers happy.
Marketplaces that use the DaaS (Delivery-as-a-Service) crowdsourced delivery model to connect you with a network of local truck and van owners.
Many crowdsourced fleets for last-mile delivery are essentially marketplaces that use freelancers to deliver goods.
Uber Eats, Postmates, and Doordash are good examples of this.
Although the food and restaurant industries are associated with DaaS, it is not limited to them.
According to a survey, 56% of millennials demand same-day shipping, and retailers are slowly but surely adopting crowdsourced shipping as a solution.
Does Amazon use crowdsourcing?
The answer is: YES.
Even Amazon is getting in on the act.
Despite its HUGE logistics network, Amazon is using crowdsourced delivery.
To broaden its reach, Amazon relies specifically on the crowdsourced delivery model.
This part of Amazon, called Amazon Flex, works similarly to Uber:
Amazon associates use their vehicles to deliver orders to customers for a fee.
Flex associates can access Amazon’s platform to select a suitable delivery on their route.
In that way, the company can easily crowdsource deliveries. While Amazon associates can supplement their income when their vehicles are idle.
Major trends in crowdsourcing fulfillment
Crowdsourced delivery is an emerging method of fulfillment.
Now, we’re going to explain some of the major trends in crowdsourcing fulfillment.
Omnichannel crowdsourced delivery
For gig economy businesses, churn is a big problem.
While many gig economy drivers value their independence, doing deliveries for one company does not always pay the bills.
This is a significant drawback of a crowdsourced company, but it can be minimized by omnichannel crowdsourced delivery.
Allowing a delivery person to work for multiple companies at the same time - or allowing crowdsourcing platforms to provide multiple services.
Because of this problem, organizations like Doordash and Postmates have moved from servicing a specific industry to providing retail delivery services across the spectrum.
Uber’s ride-hailing services have also extended to include the Uber Eats platform, along with courier, transportation of goods, and package delivery services.
Crowdsourced grocery delivery
Many retailers used to rely on a single crowdsourcing option for their crowdsourced grocery delivery until recently.
In the United States, this is most commonly Instacart.
Some fundamental shifts, however, have thrown the sector into disarray.
Grocery powerhouses like Whole Foods and Walmart are putting up tough competition in the form of one-hour delivery and curbside pickup.
Grocers recognize that they must do more than rely on single crowdsourced delivery service.
To cost-effectively satisfy capacity and the high bar customers have set for grocery fulfillment, they must diversify their fulfillment services and delivery relationships.
Crowdsourcing delivery in retail
Crowdsourced fleets are becoming more popular.
However, crowdsourced solutions are not suitable for all brands or delivery methods.
A premium delivery experience, one that is branded and handled by a well-dressed delivery worker, is commonly desired by premium retailers.
On-site services like installation, setup, upselling warranties, and user education may be required of these people.
While this can be crowdsourced, the specialized nature of the operation generally drives merchants to bring it in-house or partner with a reputable outsourced fleet.
The role of technology in crowdsourcing delivery
In crowdsourced delivery, the most crucial role of technology is to provide a centralized platform for crowdsourced delivery management.
Customer applications offer product tracking and support contactless proof of delivery, while driver apps ensure communication and delivery flow.
You may also monitor the utilization of crowdsourced fleets, adjust to seasonal or hourly requests, and send out notifications to customers and management when deliveries are late.
This technology’s data can assist you in comparing performance and making better financial decisions in the future.
Now it’s your turn.
Crowdsourced delivery is a good stepping stone to get you started.
But if you’re looking to really crush delivery logistics, you’ll need some help.
That’s where we come in.