What is Crowdsourced Delivery: A Comprehensive Guide for 2023

In an era of on-demand delivery and gig economy, the way we think about delivery logistics is undergoing a remarkable transformation. To top it off, giants like Amazon have increased customer expectations by offering expedited same-day delivery. Such tactics leave small businesses no choice other than providing fast deliveries by optimizing their last-mile operations. However, streamlining the last mile is a tough nut to crack, being the trickiest and costliest part of the business.

Businesses need an effective solution that can manage the high costs of last-mile delivery and on-demand deliveries. To counter this, they are turning towards exploring new delivery models like crowdsourced delivery.

Crowdsourced delivery is an innovative concept that relies on technology, community, and convenience in a way that’s redefining the landscape of logistics. Crowdsourced delivery services are steadily getting popular due to the demand for faster shipping services and increased competition.

In this blog, we’ll delve into the heart of crowdsourced delivery – what it is, how it works, and why it matters. We’ll also explore its origin, benefits and challenges that it poses to both senders and couriers.

What is Crowdsourced Delivery?

Crowdsourced delivery or crowdshipping is a modern approach to conventional logistics which employs common people as delivery contractors to deliver packages with their own vehicles. Instead of relying on big delivery companies, it involves using regular people, like independent drivers or gig workers, to deliver packages from warehouses, fulfillment centers, or distribution centers to customers. They are often called “crowd couriers.” 

This approach is different because it uses a diverse group of individuals to do the delivery service, especially for last-mile delivery. This method aims to make deliveries faster and maximize supply chain efficiency by using local people who know their area well. In contrast to the standard delivery model dominated by established courier services, crowdsourced delivery is unique as it capitalizes on locals to transport goods from sellers to buyers, particularly during the crucial last-mile phase of delivery.

How Crowdsourced Delivery Works?

Crowdsourced delivery is quite different in terms of delivery operations. Here’s a detailed breakdown of how crowdsourced delivery model works:

1. Platform facilitation

Crowdsourced delivery operates through a dedicated online crowdsourced delivery platform or mobile app. These platforms serve as intermediaries, connecting businesses or individuals in need of delivery services with a pool of available crowd couriers. These platforms are designed to simplify the entire process, from order placement to tracking and coordination.

2. Diverse courier network

Unlike traditional delivery services with a fixed workforce, crowdsourced delivery draws upon a varied network of individuals who sign up as crowd couriers. These can include local residents, independent drivers, cyclists, or even pedestrians. This diversity allows for a wide range of delivery options, making the service more adaptable to different locations and delivery demands.

3. Flexibility and availability

One of the primary advantages of crowdsourced delivery is the flexibility it offers both businesses and couriers. Crowd couriers operate on their own schedules, enabling deliveries to be conducted during various hours of the day, including peak and off-peak times. This flexibility proves valuable for accommodating specific customer preferences and fluctuating delivery demands to provide a premium delivery experience.

4. Geographical reach

Crowdsourced delivery thrives on its ability to access suburban and rural markets that might pose challenges for conventional logistics providers. Crowd couriers, often residing in the neighborhoods they serve, possess an innate familiarity with the local geography. This intimate knowledge enables them to navigate efficiently through even the most intricate routes, reducing delivery times.

5. Algorithmic optimization

Crowdsourced delivery platforms use algorithms that can match delivery tasks with the most suitable crowd couriers. These algorithms consider factors such as proximity to the delivery location, availability, and the courier’s preferred mode of transportation (car, bike, walking, etc.). By optimizing courier allocation, the platform ensures efficient deliveries and minimizes delays.

6. Real-time tracking

Customers benefit from real-time tracking capabilities provided by crowdsourced delivery platforms. From the moment an order is placed until its final drop-off, customers can monitor the progress of their deliveries. This transparency adds to the overall customer experience and helps manage expectations.

7. Payment structure

Crowd couriers are compensated for their services based on completed deliveries. This variable cost model contrasts with traditional logistics setups that involve fixed labor expenses, making crowdsourced delivery more cost-effective, especially for businesses with varying delivery volumes. It is also effective for seasonal demands or for fulfilling select orders.

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Benefits of Crowdsourced Delivery

Crowdsourced delivery has proved to be an innovative solution to address the challenges and limitations of traditional logistics models. This approach offers several compelling reasons for its adoption, providing benefits to businesses, consumers, and the overall efficiency of the supply chain.

1. Efficiency

The “last-mile” of delivery is the last part of the entire supply chain, is complex, and often poses significant challenges. It involves transporting goods from a local distribution center to the final destination. Crowdsourced delivery addresses this exactly by utilizing a network of non-professional delivery drivers or crowd couriers who are intimately familiar with local areas. This gives them the advantage of navigating through traffic, shortcuts, and intricate routes more effectively, resulting in quicker and more efficient last-mile deliveries.

2. Cost-effectiveness

Traditional logistics models involve fixed costs associated with fleet management of delivery vehicles and employing full-time drivers. In contrast, crowdsourced delivery operates on a variable cost basis, which is managed easily by crowdsourced delivery platforms. Businesses only pay for completed deliveries, which reduces overhead costs and makes it particularly advantageous for companies with fluctuating delivery volumes.

3. Flexibility and scalability

Crowdsourced delivery offers unparalleled flexibility. Crowdsourced fleets operate on their own schedules, allowing deliveries to be made during various times of the day, including weekends and evenings. This adaptability makes it possible to meet the growing demand for same-day or on-demand deliveries. Additionally, crowdsourced delivery can easily scale up or down in response to shifts in demand without requiring significant investments in infrastructure.

4. Wide geographical reach

Crowdsourced delivery expands the delivery footprint by reaching areas that might be challenging for traditional logistics providers to access. The network of crowdsourced drivers, often comprising local residents, ensures that deliveries can be efficiently made even in densely populated urban areas or remote locations.

5. Improved customer experience

The lack of real-time tracking and communication frustrates customers. Crowdsourced delivery provides real-time updates, enabling customers to monitor deliveries and anticipate arrival times accurately. With real-time tracking and communication, crowdsourced delivery improves the customer experience. Customers can track the progress of their orders, receive alerts, and anticipate delivery times accurately. This transparency fosters customer satisfaction and trust in the delivery process.

6. Sustainability and reduced emissions

Traditional logistics systems often involve less efficient route planning, contributing to higher emissions and environmental impact. Crowdsourced delivery optimizes routes, minimizing unnecessary trips and reducing the carbon footprint. By utilizing existing resources, such as cars, bikes, or even walking, this model promotes a more eco-friendly approach to transportation.

7. Job opportunities and empowerment

Unlike traditional fulfillment services, which offer standard employee benefits, crowdsourced delivery creates income opportunities for a diverse range of individuals, from independent drivers to part-time gig workers. This can have a positive impact on local economies and provide individuals with flexible earning opportunities.

8. Innovation and technology

Crowdsourced delivery platforms rely on advanced technologies such as GPS tracking, route optimization algorithms, and real-time communication tools. These innovations streamline the delivery process, enhance coordination, and create a seamless user experience for both businesses and customers.

Challenges of Crowdsourced Delivery

While crowdsourced delivery offers promising advantages, it also presents several challenges that need careful consideration and management:

1. Quality control

Maintaining consistent service quality across a diverse group of crowd couriers can be challenging. Without standardized training and regulations, there’s a risk of varying levels of professionalism and reliability. 

To ensure high quality across your service, it is crucial to have a robust delivery system in place to measure driver performance and collect customer feedback on a regular basis. It ensures high-quality customer experiences with the expansion of your crowdsourced fleets.

2. Regulatory complexities

Crowdsourced delivery operates in a regulatory gray area, as non-professional individuals are involved. This can lead to legal and compliance challenges, especially in regions with strict regulations for transportation and deliveries.

To avoid such legal consequences, it is advised to consult legal experts who specialize in transportation and delivery regulations. Joining and supporting industry associations that advocate fair and clear regulations for crowdsourced delivery is a good practice. Involve in healthy conversations with industry associations and regulatory bodies to improve regulations for all the stakeholders.

3. Data security and product liability

Crowdsourced delivery platforms handle sensitive customer data like their name, address, contact information, and order data. Ensuring the security of this information is crucial to protect customer privacy and prevent potential data breaches. Other challenges that businesses often face are of damaged or lost goods; determining liability becomes complex when dealing with non-professional couriers. Businesses must establish protocols for handling such situations to maintain trust with customers.

Solutions for protecting data privacy require establishing strong data encryption and protection measures complying with data privacy regulations like GDPR or HIPPA. To fix the issues of damaged or lost goods, define and streamline a clear process for handling and managing them. It is also a good practice to explore insurance that covers liabilities arising from such delivery incidents.

4. Reliability and availability

Crowd couriers operate on their own schedules. This can result in challenges when trying to guarantee specific delivery times or during periods of high demand. While crowdsourced delivery can reach remote areas, it might struggle to cover less populated regions due to a limited number of available couriers. The decentralized nature of crowdsourced delivery means that the service quality can vary based on the individual courier’s performance. This unpredictability can impact customer satisfaction.

Solutions like delivery scheduling software that can assign deliveries based on driver availability should be used. Businesses should also be prepared for peak season demands in advance. They can apply strategies like courier incentives and hiring temporary couriers to handle demand surge.

5. Employee management

Managing crowd couriers is a tough task, it involves dealing and managing people coming from all sorts of background. This process can be resource-intensive to ensure that couriers meet the required standards. In diverse regions, crowd couriers might come from various cultural backgrounds and speak different languages. It can potentially lead to miscommunications or misunderstandings.

To manage this challenge, verifying the background, reliability, and suitability of crowd couriers is essential. Maintain thorough background checks and screening processes to ensure that crowd couriers meet quality and reliability standards. Additionally, using communication tools or resources to bridge language and cultural gaps between couriers and customers can help to avoid misunderstandings.

6. Branding and marketing

Maintaining a consistent brand image can be difficult when relying on a diverse group of crowd couriers, potentially affecting the overall customer experience. As the concept gains popularity, the market could become oversaturated with delivery providers, leading to increased competition and potential difficulties in attracting both businesses and crowd couriers.

The only way to differentiate your business is by developing clear brand guidelines that maintain consistency. To follow these guidelines, encourage couriers to represent your brand during customer interactions positively. Businesses must identify unique aspects of their service and use them as selling points in marketing campaigns to attract both businesses and couriers.

Conclusion

Keeping up with expedited delivery trends is a challenge that many businesses face in today’s competitive business landscape. It requires a robust solution that fulfills the surging demand while also keeping the operational costs in check. Crowdsourced delivery comes as an effective solution that not only solves the last-mile challenges but also proves to be an agile solution for scaling business operations as per requirement.

With the right technology and strategy, businesses can easily integrate crowdsourcing models into their warehouse operations for a fast delivery experience. One such technology that can elevate your delivery experience is route optimization solutions like Upper, which provides the most efficient route for crowdsourced deliveries. Upper is a multi-stop route optimization that considers various factors like traffic, weather, road closures, and other delivery constraints to offer a seamless delivery experience. Try its 7-day free trial to get started.