With crowdsourcing and mobile apps, crowdshipping companies tap idle logistics resources and excess capacity to move things from point A to point B.
Crowdshipping, also known as crowd logistics, works by connecting senders via app to transporters such as travellers, movers or authorized drivers who will already be on the road and can drop items off at their destinations. Customers tap into a distributed network of idle logistics resources and capacity. Drivers are paid, and middlemen take a cut. Marc Gorlin, founder and CEO of Atlanta-based crowdshipping firm Roadie, likens it to plugging into a utility. His company calls itself “the nation’s first on-the-way delivery service.”
The industry’s origins date back to the 2000s, but it started gaining traction after 2010, as numerous startups looked to replicate the success of “sharing economy” firms like Uber and Airbnb. Crowdsourcing and mobile technology are common denominators. Roadie was founded in 2011, and according to Material Handling & Logistics, now has over 150,000 drivers, who are screened and certified (though not employed) by the firm to provide cost-efficient last-mile delivery.
The industry is also growing worldwide. Rappi, based in Colombia, operates in 57 cities across Latin America. It is one of the region’s most successful tech startups. A Filipino firm, Jojo, serves Manila and a nearby province.
With Amazon’s quick and cheap deliveries forcing others to up their game, says Ravi Shanker of Morgan Stanley, many crowshipping customers are companies. Four-fifths of Roadie’s revenue comes from retailers such as Macy’s, Walmart and Home Depot. Long-haul routes will likely continue to be the domain of corporate fleets and logistics giants like FedEx, but crowdshipping companies have carved out a niche. They can more easily handle spikes in demand and navigate last-mile delivery, particularly when drivers are local and know the terrain.
Airlines are also big customers. Roadie first partnered with Delta in 2015 to help return delayed or mishandled baggage to its passengers. Now nearly half of Delta’s bags are delivered by travellers using the Roadie app. Gareth Joyce, President of Delta Cargo, says this has cut costs, sped up deliveries, and improved customer satisfaction. According to The Economist, Alaska Airlines, Southwest and United also use Roadie to deliver luggage.
Other crowdshipping companies focus more on excess capacity, specifically the unoccupied space in travellers’ suitcases. Brussels-based PiggyBee, and Grabr, with offices in Moscow, New York and San Francisco, help consumers get products that are only available or more affordable in other countries. International travellers with the right itineraries either purchase the product and get reimbursed, or pick up items purchased online by the customer, and receive a tip on delivery.