Last 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 – an Uber for the delivery sector now looms on the horizon. We invited readers to share their thoughts on the topic… is this the start of something hugely significant, is it a hype-fuelled flash in the pan, have we seen it all before, is it doomed to fail?
Steffen Pasgaard, vice president at EDI-Soft sees strengths for Amazon, a few weaknesses in the overall proposition, but a very interesting potential legacy from crowd-shipping initiatives:
Steffen Pasgaard, EDI-Soft
“I think it’s very interesting that Amazon is entering this market. Yes, sometimes they do things that appear to be all about hype and promotion, but I don’t think that’s the case this time.
“Uber and AirBnB – and others – have successfully disrupted the markets they operate in. They’ve turned them upside down by tapping into unused assets. There are still lots of opportunities to do this in other areas. But I think the existing parcel firms are way out in front – they know where all the pressure points are.
“Crowd-shipping is interesting. But the lack of real appreciation for how complex the problems of the last mile are is something I’d be concerned about.
“Will the people doing the shipping have the same regard for the importance of getting it right, keeping the promise that was made at the checkout? Will they understand the importance of protecting the brand, and of putting the customer first?
“The classic courier makes sure the drivers do things properly. Some have uniforms, they all get some sort of customer service training. In the crowd-shipping world customers will expect the same standards.
“One of Amazon’s biggest advantages is that it is Amazon, of course. It has a brand of its own that it will be very sensitive about protecting. If they can combine that with their networks and their experience, then they could really make this work in ways that others are unlikely to.
“I don’t think crowd-shipping can ever out-compete traditional couriers. It might be perfect for occasional use – a special delivery, for example.
“But while it won’t be a mass market alternative, crowd-shipping might force traditional delivery businesses to become more innovative and more flexible.”
Patrick Tame, CEO of Beringer Tame doesn’t think this will be a game changing move from Amazon, but sees it as part of the ecommerce giant’s continuum of trying new ideas and learning from them:
Patrick Tame, Beringer Tame
“Amazon isn’t the first business to pick up this idea and I’m sure it will find some limited success with it, however it’s not a game-changer, and I don’t think it’ll become a better courier than those already out there.
“One thing I’ve observed about Amazon is that it will generally try stuff, and if it makes mistakes, it makes them quickly and moves on. But this just allows it to keep moving and be innovative. Of course, Amazon’s size gives it an enormous advantage to make a go of it (even if it fails), but could also be its Achilles heel. In the same way it caught retail giants asleep and set up a business model that now appears obvious, Amazon is now the giant with the corporate inflexible mentality and institutionalised thinking. There are no entrepreneurs left at Amazon, and it is entrepreneurs that make disruptive business models work.
“As for the dream of a C2C service, well, moving parcels is – and always has been – pretty cheap, and the efficiency of big logistics networks mean we can now expect a parcel to be posted for a few pounds with a professional service. The only way for the drivers (the consumers) themselves to make a worthwhile amount of money out of this app is to have a van and decent parcel volumes. Not forgetting there are lots of distribution networks which give opportunities to freelance drivers already. There just simply isn’t enough money in delivering a parcel to justify the faff, even if it’s on a journey you’re already doing. Dealing with Joe Public when you’re inexperienced in customer care also means you’d probably rather do without the £2 for your efforts. The reason Uber works as a model is because there’s a lot of profit in it, but the margin in parcels is far too low.
“Is there a market for freelance drivers to use an app to build their networks? Of course there is. But is that a true Uber-style innovative disruptive business model? I doubt it. I think this is either a misguided corporate venture that really thinks there is a C2C network opportunity (which there’s not), or just Amazon hyping what is really just another entry into the courier market. Knowing Amazon, it could be either.”
Craig Sears-Black, UK MD at Manhattan Associates thinks this kind of development is inevitable as retailers continue to try to out-do each other:
Craig Sears-Black, Manhattan Associates
“When it comes to retail fulfilment, change is coming. Retailers are experimenting with the on-demand economy to find ways to improve delivery and fulfilment, and ultimately, keep up with customer expectation. Amazon’s exploration into releasing an app-based portal allowing members of the public to become bonafide delivery people reflects this revolution. It sounds ingenious but how it will play out in reality remains to be seen.
“The app will require accurate daily information on inventory availability and delivery co-ordination. If Amazon’s delivery plan is to act as a model for other retailers, we will soon discover if their organisational capabilities are up to the job. Without a centralised order management system that can adapt quickly to a growing number of fulfilment channels, retailers are likely to struggle.
“It seems ironic at a time when retail businesses are going above and beyond to find new ways of engaging with consumers, that they’re not putting the same time and investment in the facilitating back-end solutions, but it’s the truth. And ultimately this is holding back their fulfilment flexibility. Time will tell whether Amazon’s experimentation becomes the new industry standard or a flash in the pan idea but one thing is for sure: retailers must get ready for a fulfilment revolution, in whatever form it may take.”
Mark Thornton, marketing director at Maginus expects there could be a post code land-grab from civilian-carriers wanting to cash in on the opportunities Amazon brings:
Mark Thornton Maginus
“It’s worth noting the priority Amazon is giving delivery and as a recognised industry innovator, should be listened to.
“Amazon suffers, as do many retailers, with the “last mile conundrum”. Namely, how to get a parcel, efficiently, in to the hands of the recipient, at the time they desire, while preserving the brand identity.
“Many delivery companies can do two or three elements of the conundrum but not four.
“Uber Rush has had some success in the US (taxi drivers serving as delivery agents to fill gaps between fares) but not with high value, or fashion items. Nimber, a Scandanvian import, is in beta in the UK with its peer to peer solution but merely acts the social connection between parties allowing individuals to bid for the parcel.
“Neither model will suit Amazon.
“Delivery on Amazon has to be a promise that is met. It cannot afford to leave the most important aspect of an online purchase to any Joe Bloggs, with an app on his phone, that happens to be going near a delivery address on his way to a prior engagement.
“So, I believe we can expect a network of recognised agents that ‘claim’ postcodes. In effect asking for trusted people in the community, that know their neighbourhood to pick up parcels from a hub and perform local delivery. Perhaps it’s the perfect job for the tech savvy retired silver surfers?”
Rob Mead, Marketing Manager at Parcel2Go thinks Amazon’s size will give it the edge over any other crowd-sourced delivery service providers:
Robert Mead, Parcel2Go
“People are entrepreneurial; they are always looking to do something that hasn’t been done before, and this new idea taps into that drive. Carriers already turn to self-employed drivers with their own vehicles to deliver parcels, and this latest idea is just the next step up. Of course, there are some issues that will need to be sorted before a launch of this app could take place, such as safety, privacy and driver vetting, but if anyone has the clout to pull this off, it’s Amazon.
“They have already proven that they want to shake up parcel deliveries with ideas like the Prime membership, one hour delivery slots and using the New York subways; this is simply the next stage of improving the buyer experience.
“An Uber-for-delivery project does sound like a credible venture from a company such as Amazon. Their commitment to the customer is what drives their innovation on new projects like this, and they are always looking for ways to improve the customer’s journey, and one of those ways is to reduce the time between when a customer clicks ‘order’ and the package arrives in their hands. The details may be a little vague at the moment as very little is known about how it will actually work, but considering Amazon’s huge list of contacts and resources, it shouldn’t be too big a project for them to roll out.
“Yes, this method of delivering parcels is the next step up from the self-employed model that many large courier companies already have in place. It’s most likely that Amazon will use it as a final option; either as a way of transporting parcels to the delivery hubs or getting it to the recipient’s door. The final mile is the hardest part of delivery for many carriers, with extra costs that come from having multiple collection and delivery points. Outsourcing this will allow them to focus on consolidated deliveries between hubs. Any savings that are made by the carriers as a result can be passed on to the customers.
Smaller companies that have attempted similar projects weren’t necessarily doomed to fail, but the size of the carrier does play a big role. Whereas companies in the past may not have been on a global scale, Amazon is one of a very small number of truly international firms that have delivery hubs scattered across the globe. But they are only able to work on an app such as this because they have the infrastructure and resources in place to turn it into a reality. Amazon’s size means that they are able to reach out to more people, put their plans in place quicker and, should it not take off, be able to take a loss without suffering too much.”
If you’d like to share your thoughts on this topic feel free to drop us a line.
