Earlier this month, we ran a story on reports that Amazon is developing an app that will open the door to a crowd-sourced approach to parcel delivery, not dissimilar to the approach Uber has taken to taxis. We invited readers to share their thoughts on the topic, and here Nigel Doust, CEO of Blackbay, tells us what he thinks.
Is this little more than Amazon hype?
Essentially no. Over the last few years’ Amazon has invested heavily in a range of technologies to smooth out and reduce the time between order and fulfilment, be it from Amazon directly or within their marketplace, as well as innovations into the retailers and organisations selling goods and services.
Amazon’s reputation within the industry is one of control and quality and while it is clear that it may not want to move into managing deliveries, it is continually seeking to benchmark postal, courier, express and parcel (PCEP) organisations to meet its customers’ delivery expectations.
One of the key challenges all PCEP companies face is workforce utilisation and adhering to standard working practices. This is particularly relevant in the ‘lifestyle’ segment of the marketplace and a Uber-like delivery service allows Amazon to show continuous innovation.
Does it sound credible?
Fundamentally yes. The utilisation of the workforce in an Uber-like model is particularly relevant as there is little dwell time on the road, the vehicle can be used for multiple purposes, namely carrying both passengers and delivery goods and the rounds/tours/routes can be combined to reduce costs but also improve delivery success.
Same-day is an area particularly relevant for growth in the industry as it cuts costs for PCEP organisations but more importantly, this type of model allows PCEPs to look at surge-pricing essentially meaning the cost of the delivery can be set higher, the shorter the delivery window.
Is there a role for Uber-type model?
Yes, there is. The model has been tried before with PCEP organisations using the London Underground to plan specific rounds/tours/routes via train timetables and asking their delivery agents/workers to deliver to the end-point against those. With an Uber-type model any organisation, that has fleets of vehicles or workers walking or driving the streets, can be converted into couriers by deploying simple applications/platforms such as Blackbay’s Delivery Connect.
The model works well for same-day deliveries, particularly across small or short route post code areas. In time the key deliverable for the retailer and PCEP organisation will be the data they collect around the individual customer’s delivery preferences. The distance of the delivery route and the value of the goods inside the parcel which will allow new pricing algorithms to be determined.
Consumers will embrace the concept if the service offered combines price competitiveness (the cost of same-day delivery vs the convenience of not having to make a journey themselves to collect the goods) plus stronger delivery guarantees. Due to the nature of any same-day parcel or packet, there is a heightened expectation around delivery.
The Uber-type model would also work in a B2B environment i.e. stock movement and rapid fulfilment.
Are smaller players doomed to fail now Amazon have entered?
Not necessarily. Amazon and the crowd sourced model will be closely watched by organisations of all sizes, especially around parcel volume and delivery success, not only through official statistics but also via social media and other channels expressing customer experience.
Uber-type services may not resonate with all consumers and as above same-day deliveries are very specific in terms of parcel content. While an Uber-type model allows larger parcels to be carried, as opposed to smaller ones across public transport, there will be continued issues around insurance.
Some of the parcels might be ‘just in time’, such as that evening’s sporting or theatre tickets which have both material and emotional value.
This Uber-like, crowd sourced delivery model is not new. It has been successfully tried in the US and Europe, all be it on a smaller scale, across a wide range of delivery markets for example, food delivery.
In fact, in some delivery markets it has started to become the preferred delivery option, allowing new entrants to enter the market faster whilst still providing a transparent and reliable level of service.
There is room for both the ‘traditional’ and Uber-like models to work together and the sooner that they do, the better the industry performance will be.
We have comments and opinions on this topic from lots of eDelivery readers, and will be publishing a series of them later today.