In less than a decade, Uber and Lyft have become staples in global transportation systems. Now, in almost any country on Earth, travelers and commuters have an option that didn’t exist a generation ago: pull out their phones, make a few service requests on an mobile app and summon drivers to take them to their destinations on time.
E-commerce retailers are now hoping to apply that same methodology to package delivery in their business model.
A few companies already offer delivery via third-party couriers. With UberEATS and Postmates, users essentially ask couriers to run errands for them—typically picking up food from a restaurant—and bring them to their homes. Users can now order food delivery from within the Yelp app.
Is it such a far cry to imagine package delivery services using a similar fleet of third-party couriers? Absolutely not. In fact, many are already doing so.
What is The Link Between Ride Sharing and Parcel Delivery?
Like Uber and Lyft, crowdsourced delivery companies and services rely on networks of independent contractors typically driving their own vehicles. These drivers wait for assignments—in this case, they wait for packages that need delivering—and then immediately pick them up and move them to their destinations.
This work can be desirable for drivers who want flexible schedules and pay-per-delivery rates. It can also be great for delivery companies, who can promise same-day or even same-hour delivery when their fleets get big enough.
Right now, these services are somewhat rudimentary: one package, one delivery; then another package and another delivery. But software is constantly improving. Probably much sooner than we think, these couriers will be able to deliver package after package, optimized for time and distance, not unlike UPS and FedEx do.
Why Are Package Delivery Companies Interested in The Ride Sharing Model?
E-commerce retailers are always looking for ways to deliver packages faster as consumer expectations get more intense. Third-party couriers could provide an important link in that chain.
Assuming distribution networks are dense enough and driver fleets are large enough, these drivers could make the promise of same-day delivery a reality in many parts of the U.S.
Further, third-party drivers are almost certainly cheaper than full-time employees. They are generally contractors, which means companies don’t have to assume responsibility for benefits or pensions. They drive their own vehicles, which means package delivery companies don’t have to invest as much in their own fleets. And third-party contractors tend to have high levels of turnover and low levels of organization, which means average wages will be lower than those for lifetime workers.
Third-party drivers also offer more flexibility in terms of delivery routes. It’s highly inefficient for a UPS or FedEx truck to reach far-flung rural customers or to deliver just one package to a neighborhood. If UPS and FedEx are paying flat rates to third-party drivers instead, those deliveries become as cheap (or only slightly more expensive) than deliveries on more efficient routes.
Resource: The Future of Parcel Delivery (on-demand webinar)
Who’s Using Third-Party Drivers?
Put simply, a host of companies are experimenting with third-party parcel delivery.
The biggest is Amazon Flex, which is now several years old. Its pitch is straightforward: sign up as a driver with Amazon and you could earn up to $25 per hour as a contractor delivering packages. Flex drivers set their hours, pick up a pre-ordained list of Amazon packages and then deliver them to Amazon customers assigned locations. In other words, it’s very similar to Uber.
Other companies are more unconventional. Take Dylyver. The startup offers essentially the same service as Amazon Flex—third-party package pickup and delivery—but it bills itself as “peer-to-peer package delivery,” encouraging users to use Dylyver to ship packages with people who are traveling in the same direction.
Dylyver pays its drivers in Dycoin (a cryptocurrency token) and encourages shippers to use Dycoin on their purchases.
Hitch is another peer-to-peer delivery platform. Users sign up as “Travelers” who can pick up and delivery packages, or “Shippers” who need items moved. Shippers pay Hitch, and then Hitch pays its travelers. The app advertises more everyday consumer items than an Amazon Flex driver might move. Its homepage describes “groceries from Publix,” “my tennis racket” and “a letter to my lawyer,” not Amazon packages en masse.
On the other hand, Deliv markets itself as a business solution. The company describes itself as “a new last-mile delivery solution to power same-day delivery for retailers” including grocery stores, pharmacies and traditional retailers. It’s also integrated with Shopify so shoppers can choose a “get it today” option and businesses can ship those items with Deliv.
It’s possible that none of these solutions are right for your business today. But it seems inevitable that eventually all shippers will occasionally rely on third-party, rideshare-style services for last-mile solutions. Supply chain managers need to stay aware of their options and be open to experimentation to find the partner that best fits their company’s needs.
The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.