12/7/21, 5:25 PM Gartner Reprint Licensed for Distribution Adopt Crowdsourcing Last-Mile Platforms as a Key Component of Your Logistics Strategy Published 8 November 2021 - ID G00746581 - 11 min read By Chris Kina Crowdsourcing last-mile platforms are enjoying rapid global adoption as credible and long-term solutions for meeting e-commerce service demands. Logistics leaders should embrace this COVID-19-accelerated delivery method to secure parcel capacity, freight savings and delivery excellence. Overview Key Findings ■ With the continued growth of e-commerce, shippers struggle to meet constantly changing consumer delivery demands and order frequencies. ■ Capacity constraints and urban traffic congestion in densely populated areas are becoming the norm, impacting service levels, driving logistics inefficiencies and increasing last-mile costs. ■ Logistics leaders require new sources of last-mile delivery options to consistently meet the highly variable delivery speed demands of consumers. Recommendations Logistics leaders managing logistics and customer fulfillment who are looking to optimize their lastmile delivery by leveraging crowdsourcing should: ■ Increase delivery capacity utilizing crowdsourcing by reviewing opportunities where failure points exist in direct-to-consumer (D2C) last-mile networks. ■ Assess crowdsourcing providers to evaluate where best-fit scenarios exist, matching the appropriate solution with capacity and/or service needs. ■ Evaluate the platform’s execution, integration and customer satisfaction success by testing and benchmarking the crowdsourcing solution. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 1/12 12/7/21, 5:25 PM Gartner Reprint Introduction E-commerce demand on last-mile delivery capacity, costs and service levels continues to challenge logistics leaders to successfully meet customer service expectations. Figure 1 below lists the top constraints logistics leaders face when measuring final-mile execution success. Figure 1. Top Final-Mile Constraints Outside of packaging suitability for final (last) mile, the constraints of urban market access, changing consumer demand around delivery speed and cost all combine to challenge logistics leaders to find new solutions. D2C shipments, in particular, add an additional layer of complexity to these last-mile delivery challenges, making the task of successfully executing these deliveries even more difficult. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 2/12 12/7/21, 5:25 PM Gartner Reprint Crowdsourced delivery capabilities answer that challenge, providing logistics leaders with additional last-mile capacity resources, lower delivery costs through optimized routing and order consolidations and improved customer experience for D2C shipments. Crowdsourcing, in the context of a last-mile delivery solution, is applicable to multiple products and industries. It is a method of fulfillment that uses a network of local delivery modes in densely populated areas to deliver orders directly to customers. There now exist more localized points of fulfillment enabling crowdsourced last-mile delivery (e.g., fulfillment from store). But let’s get more specific about the definition. Crowdsourcing as a last-mile delivery solution combines technology and local delivery resources to execute shipments from warehouses, stores or fulfillment centers directly to consumers. Crowdsourcing’s ability to optimize orders, routes and cost is achieved through the application of technology platforms combined with the aggregation of delivery resources. This combination allows crowdsourcing to become a scalable, agile and deployable solution for almost any type of product and distribution network. Traditional parcel fulfillment processes simply cannot meet the delivery timelines where capacity limitations and congestion have taken over. Crowdsourcing provides shippers a new path down those crowded streets. Analysis Increase Delivery Capacity by Applying Available Crowdsourced Resources to D2C Last-Mile Failure Points By reviewing opportunities where failure points exist in D2C last-mile networks, retailers can apply crowdsourcing for increased delivery capacity. Logistics leaders should segment their D2C demand and identify, from a geographic or service perspective, where the risk of last-mile execution failure points is more prominent, and then apply a crowdsourced solution. We all have heard of crowdsourced last-mile delivery — and most of us have used it for grocery or takeout deliveries. The solution’s rapid expansion into multiple verticals now provides a wider range of companies the opportunity to capitalize on crowdsourcing benefits for D2C delivery. And there is no shortage of crowdsourcing vendors on a global scale to choose from, and the crowdsourcing vendor marketplace continues to expand. Table 1 presents just a small sample of providers in this rapidly scaling last-mile platform market. Table 1: Global Crowdsourcing Delivery Platform Vendors https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 3/12 12/7/21, 5:25 PM Gartner Reprint Name Headquarters Verticals Serviced Regions Served (2021) Bringg Tel Aviv, Israel All Global Budbee Stockholm, Sweden All Nordics Deliveroo London, England Food Europe and Asia DoorDash San Diego, U.S. Food U.S. and Europe Entrusters Buenos Aires, Argentina All Global Getir Istanbul, Turkey Food Turkey and Europe Gorillas Berlin, Germany All Global Locologic Chicago, U.S. All Global Narvar San Francisco, U.S. All Global PiggyBee Belgium, France All Europe Uber Eats San Francisco, U.S. All Global Source: Gartner Recent vendor acquisitions by large retailers of crowdsourcing platforms provide more evidence that these solutions are viable D2C last-mile logistics strategies. Target Stores, a $94 billion dollar retailer, https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 4/12 12/7/21, 5:25 PM Gartner Reprint saw the need for D2C shipping solutions beyond traditional parcel carriers and purchased crowdsourcing companies Deliv and Shipt as technology and delivery assets. 1 More recently, in 2021, UPS acquired Roadie, a crowdsourced delivery platform, 2 and Walmart went even further, offering its own last-mile services by launching GoLocal, carrying goods from other local retailers to consumers under a crowdsourced platform. Walmart said that the delivery fleet would also include newer technologies for delivery modes, such as self-driving vehicles and drones. 3 Further evidence supporting the need for logistics leaders to seek new last-mile solutions, particularly in urban areas, is summarized in Figure 2 below. The World Economic Forum projects that, by 2030, demand for urban last-mile delivery is expected to grow by 78% — and this study was conducted in the pre-COVID-19 environment. 4 Figure 2: The World Economic Forum Projected Demand for Urban Last-Mile Delivery This growth rate, within the confines of the world’s top 100 cities, will translate into 36% more delivery vehicles on the streets. 4 Parcel delivery vehicles are already double-parking and blocking lanes in cities; empty delivery miles are piling up from inefficient routes; and the environmental impacts of congestion and inefficiencies are having adverse effects on sustainability efforts of shippers. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 5/12 12/7/21, 5:25 PM Gartner Reprint Crowdsourcing providers typically have four common process flows, or execution steps, that make them work — from both a service and cost perspective. Figure 3 illustrates those basic process flow components. Figure 3: Crowdsourcing Process Flow Components The four process steps can be described this way: 1. Online orders are processed through the virtual crowdsourcing platform and the data is aggregated and deployed at point of shipment — your distribution center, store, 3PL — wherever the pickup origin will take place. 2. Orders are consolidated where possible and dynamically assigned an optimized route and the packages are dispatched to the optimized asset (i.e., mode of transport) — a parcel fleet, gig driver, cargo bike, delivery van — whatever combination of route and mode meets the delivery speed requirement at the lowest cost. 3. Orders are scanned when loaded or picked up, initiating real-time track-and-trace mobile alerts to the shipper, delivery driver and the customer. 4. The package arrives at the final delivery destination and the proof of delivery (POD) is electronically confirmed in real time. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 6/12 12/7/21, 5:25 PM Gartner Reprint Supporting the process flow is, of course, the technology. Crowdsourcing platforms allow not only optimized delivery execution, but also provide the ability to: ■ Deliver real-time route updates on a gig driver’s phone. ■ Match demand and service speed requirements without manual intervention. ■ Create optimized, efficient and dynamic routes to deliver your products. There are three technology components common in all crowdsourcing platforms (see Figure 4): ■ The dispatch software application, where dynamic order and route optimization occurs. ■ The driver application, which directs the delivery resource along the path to optimized delivery execution. ■ The customer-facing application, which measures the success of the customer experience. Figure 4: Three Critical Technology Components That Optimize Crowdsourcing https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 7/12 12/7/21, 5:25 PM Gartner Reprint Dispatch Software The first component, the dispatch software, is the core of the platform where dynamic order and route optimization occur. For example, say routes have already been built in advance to ship today (through the platform’s optimized order and routing process), but an order comes in at 10 a.m. for same-day delivery. The software will dynamically add this same-day order to an existing route, or, if none are available, assign the most cost-effective mode to deliver as dictated by the delivery requirement — all without manual intervention by the shipper. After the order is dispatched, the realtime tracking and ETA calculations and alerts are triggered to both customer and shipper. The platform also provides an operational dashboard to monitor exceptions, delays and report performance metrics. Driver Application https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 8/12 12/7/21, 5:25 PM Gartner Reprint The second critical component of crowdsourcing platforms is the driver application. This mobile interface provides the driver with: ■ Real-time route and traffic updates to avoid delays in delivery ■ Electronic proof of delivery for fast and accurate delivery confirmations ■ Live chat with dispatch and driver to avoid failed pickups — a costly event in D2C deliveries given the relatively low order value. Customer-Facing Application The third technology component is the customer-facing application. This component is critical as it will measure the customer experience for your delivery. It provides real-time driver tracking for the customer with dynamic ETA updates. Also, any unique delivery requirements and instructions (for example, leave at door, signature required) are noted. A live chat feature helps both the customer and driver coordinate the final delivery — again avoiding costly failed deliveries. A 2021 study by location data firm Loqate reveals that 8% of all domestic first-time deliveries fail, costing retailers an average of an additional $17.20 per order. 5 No small sum in the context of lower-margin D2C orders. Even more important than the cost, it’s the failed customer experience. The same study also highlights that 62% of consumers have experienced a late or failed delivery with their e-commerce orders — a statistic that should worry all D2C shippers. 5 Assess Crowdsourcing Providers to Evaluate Where Best-Fit Scenarios Exist Once you have determined the segmented opportunities where a crowdsourcing platform can help with capacity, execution and/or stabilize delivery costs, it is time to choose providers and begin the evaluation and selection process. It is important to point out here that crowdsourced solutions are typically not a one-size-fits-all proposition. The crowdsourced provider market continues to expand as a result of generic growth of provider geographic and vertical coverage areas, consolidation among startups and new players entering the market. Therefore, the focus should be on matching your specific pain points and needs to available providers to determine the best-fit scenario. These are the core considerations to investigate when selecting crowdsourcing providers: ■ Service levels: Ability to meet delivery speed requirements based on the service-level commitment of your e-commerce business model, as well as real-time customer experience data capture and reporting. ■ Technology: Real-time tracking and notifications, dynamic route optimization, order consolidation, operational and customer data and analytics, branded customer-facing applications, fast integration abilities. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.163638756… 9/12 12/7/21, 5:25 PM Gartner Reprint ■ Delivery resources: Specific geographical coverage and modes of delivery offered (e.g., trucks, vans, gig drivers, cargo bikes). Obtain detailed delivery resource types so you understand who/what will be delivering your products. ■ Scalability: Ability of the solution to quickly and easily scale up, and down, as your online business fluctuates. E-commerce demand can be highly variable/seasonal — any solution should be able to immediately adapt to volume changes. ■ Visibility: Not only for track/trace/delivery, but also visibility into the platform’s daily operations. Metric reporting and exception management abilities are critical. ■ References and case studies: Several references and success stories shared by the supplier. All should be vetted. If a supplier doesn’t have them, look elsewhere. Evaluate the Platform’s Execution, Integration and Customer Satisfaction Success by Testing and Benchmarking So crowdsourcing can improve both capacity and delivery performance over multiple types of delivery modes, geographies and verticals. But how does one get started? Table 2 lists the five initial steps logistics leaders should take to test, benchmark and evaluate the platform’s execution, integration and customer satisfaction success in order to capitalize on this last-mile solution. Remember to start small in scope; choose a particular geographic location where service failure is most likely to occur. Table 2: Initial Steps to Implement Crowdsourcing Initial Steps to Implement Crowdsourcing 1. Segment geographic areas of demand to apply crowdsourcing platforms. 2. Consider your current distribution network footprint for crowdsourcing applicability. 3. Engage crowdsourcing platform vendors to select the most appropriate solution for each segment. 4. Acid test market solutions to validate integration, execution and service deliverables of the platform. 5. Use success as a stepping stone to expand the platform and build long-term delivery strategies for service excellence. Source: Gartner One caution around the growth of crowdsourcing platforms is related to the gig economy and its multiple forms of transport, such as cargo bikes, scooters, electrified bikes and even autonomous https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.16363875… 10/12 12/7/21, 5:25 PM Gartner Reprint delivery vans. While providing additional capacity and sustainability with regard to emissions, will this rapid growth of delivery modes help ease congestion or possibly add to it? In addition, in Europe (Spain and Italy, in particular) there is a growing call to ban gig economy vehicles from using pavements. There are also concerns over the possible exploitation of workers that have no minimum wage protection due to their self-employed status. While crowdsourced delivery remains an important emerging component in D2C last-mile execution and optimization, logistics leaders should remain cognizant of the aforementioned risks with this platform. Cautions withstanding, by embracing crowdsourcing now as a strategic component of your last-mile delivery network, you can secure an additional D2C weapon to improve delivery performance while optimizing your consumer delivery networks. Crowdsourcing for last-mile delivery, fueled first by the pandemic and now by the permanent change in consumer buying habits to online shopping, has added more localized points of fulfillment, allowing for its evolution into a powerful, localized delivery optimization resource. Additionally, many types of deliveries can be augmented by crowdshipping platforms, including D2C, consumer to business for returns and business to business (B2B) — all driving improvement in the customer experience that ultimately defines your success with e-commerce fulfillment. When segmented properly as part of your overall e-commerce delivery strategy, crowdsourcing can improve both the customer experience and reduce costs for last-mile deliveries. Evidence 1 Target Launches a Dedicated Shopping Site for Same-Day Delivery, Powered by Shipt, TechCrunch. 2 UPS Enters Into Agreement to Acquire Roadie, UPS Financial Release. 3 Walmart Launches Delivery Business to Connect Other Local Retailers With Consumers, CNBC. 4 The Future of the Last-Mile Ecosystem, World Economic Forum. 5 Fixing Failed Deliveries: Stamping Out Faulty Fulfilment, Loqate. https://www.gartner.com/doc/reprints?id=1-287QEIA9&ct=211122&st=sb&__hstc=193804210.4f8779353052c41768343d2301d6427d.1625695934578.16363875… 11/12 12/7/21, 5:25 PM Gartner Reprint © 2021 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. It consists of the opinions of Gartner's research organization, which should not be construed as statements of fact. 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