How crowdsourcing shipping through technology will make last mile delivery cheaper (AMZN)

The proliferation of e-commerce has transformed free shipping and same-day delivery from perks to table stakes — and retailers are paying the price. With daily parcel volumes surging and customers increasingly unlikely to foot the bill, companies have been tasked with finding new ways to offer speedy shipments without eating costs.

Among the most popular strategies is crowdsourced delivery, the Uber model helping online shops solve the most expensive part of shipping: the last mile problem. Like Uber and other ride hailing apps, a number of crowdsourced delivery solutions have been cropping up over the past few years to ease these pains by connecting customers directly with local couriers. And it’s not just startups either; Amazon, the world’s undisputed e-commerce leader, is investing big in crowdsourcing deliveries.

How much does Amazon spend on shipping?

“Free shipping” comes at a high cost. According to Amazon’s 2017 annual report, the company spent $21.7 billion in shipping last year — a number that includes sortation, delivery center, and transportation costs. This is nearly double the $11.5 billion it spent on shipping in 2015. And as the expectation of free, same-day delivery becomes the standard for online consumers, even giants like Amazon need to seek alternative solutions.

The crowdsourcing solution to the last mile problem

The last mile of delivery is the most expensive and time-consuming part of fulfillment for retailers and their logistics partners, comprising 53% of the overall cost of shipment. Crowdsourcing takes the onus off of companies, instead connecting customers directly with local couriers to expedite deliveries and cut down on costs.

The crowdsourcing model is already popular among meal and grocery delivery and, seeing the success of startups like Uber, Airbnb, and GrubHub, e-commerce retailers are now eyeing it to fulfill their online orders. As a result, general use crowdsourced delivery companies have emerged to meet this need.

Here’s a look at how three companies – Amazon Flex, Hitch, and Deliv – are trying their hand in the shipping industry — and what’s coming up next.

Amazon Flex – Deliver with Amazon

Launched in 2015 and piloted in Seattle, Amazon Flex lets customers order and receive packages through its on-demand delivery service, Prime Now, which guarantees free one- and two-hour deliveries. For Prime customers with already high expectations for prompt delivery, not much changes; the service primarily markets itself as a side gig for couriers.

For the most part, the app is only open to people who have cars (except in select regions allowing commercial bicycles), so those who want to make deliveries on bike or foot might have to look elsewhere. The service is particularly attractive to rideshare drivers who may want to make extra money without having strangers or potentially disruptive passengers in their cars. Anyone 21 or older with a smartphone, car, and valid driver’s license can log into the app and schedule their availability to start making deliveries.

Shipments can originate at an Amazon location, store, or restaurant. Drivers use their smartphone camera and GPS to scan packages and get turn-by-turn directions …read more

Source:: Business Insider

      

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