July 20, 2022

What is Crowdsourced Delivery, and How Does It Work?

What is Crowdsourced Delivery, and How Does It Work?

Interest in crowdsourcing increased in popularity throughout the COVID-19 pandemic as businesses and logistics operators sought innovative ways to move goods quickly through the last mile and into customers’ hands. If you’ve used food delivery services like GrubHub and Postmates, you’re already familiar with crowdsourced delivery. Other services, such as DoorDash, Instacart, and Shipt, have made strong headway into online grocery and other e-commerce spaces by providing gig workers who pick, purchase, and deliver items within hours.

Though consumers spearheaded the demand for these types of services, it was only a matter of time before B2B options began to spring up. While it wasn’t so long ago that the logistics sector had to figure out how to meet demands for two-day delivery, now consumers expect some of the items they purchase online to arrive within hours instead of days. Crowdsourcing offers one option for businesses of all sizes to meet that demand.

Why is Crowdsourcing Becoming Popular in Logistics?

Same-day delivery presents some logistical challenges that most standard parcel carriers and couriers aren’t equipped to handle. Some of these challenges include:

  • Staffing. Most businesses don’t have the capabilities and insights necessary to predict daily sales, making it challenging to properly staff same-day delivery personnel. In addition, keeping instant delivery workers on staff isn’t cost-effective in many situations since those workers may end up sitting around with nothing to do. Conversely, delivery staff might end up working unwanted overtime to finish the day’s deliveries.
  • Routing. With days to plan and organize deliveries, a business can combine a full day’s worth of shipments and send them all out on one vehicle. However, the routing software and dispatching techniques used by most couriers or parcel carriers can’t accommodate same-day, one-off deliveries cost-effectively.
  • Tracking. Parcel carriers track orders at important touchpoints. For example, when the order gets loaded onto a truck or left on a customer’s front porch. This method works fine for two-day deliveries, but customers expecting their delivery within an hour or two want a more granular view of their order’s location than what parcel carriers can provide.

Incorporating a crowdsourced delivery option into your company’s broader logistics and fulfillment plan may help to overcome some of the challenges listed above through the following benefits:

  • Larger pool of drivers. A crowdsourcing platform can potentially access hundreds of local delivery personnel at a moment’s notice to pick up your customer’s order from your store or warehouse and deliver it.
  • Reduced transportation costs. With a standard courier, you have to pay a fee for the time the driver spends moving empty. Crowdsourced gig workers get paid to pick up and deliver the order. You don’t pay for their vehicle costs, fuel, travel to your facility for pick-up, or travel home after drop-off.
  • GPS tracking. Gig workers access the crowdsourced delivery platform via a mobile app. That app then tracks their location in real-time, allowing you to provide real-time order location to the customer waiting for the order.
  • Since delivery workers get pinged on an order-by-order basis, crowdsourced delivery can easily scale based on need. You can incorporate it as part of your daily solution or only leverage it as an option to handle overflow or unexpected demand.

While crowdsourcing doesn’t provide a standalone solution for fulfillment, it can certainly help to expand your same-day delivery capabilities. If trends continue, crowdsourced delivery will soon become a standard part of fulfillment models for small businesses and major retailers alike.

About Phoenix Logistics

Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.

As Senior Vice President for Phoenix Logistics, Mr. Kriewaldt oversees the company’s day-to-day operations as well as corporate strategic development. With more than 25 years of experience in the industrial real estate and logistics industries, Mr. Kriewaldt boasts extensive expertise in real estate practices as well as third-party logistics operations, contract negotiation, and new business development. Mr. Kriewaldt proudly fosters long-lasting business relationships by putting the customer first and creating mutually-beneficial partnerships for all involved. He also holds a Master’s in Business Administration from the University of Texas and a Juris Doctorate degree from Marquette University.

Frank P. Crivello is a Milwaukee-based developer and Chairman & Founder of Phoenix Investors.

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