The last couple of months we’ve seen a number of technology investment announcements and stories from Amazon – most recently with an app called ‘On My Way’. Not surprising, says Andy Hill, commercial director at Electio. Neither is it surprising that so many people have been asking whether the ‘On My Way’ announcement is grounded in a realistic ambition to shake up the industry, or whether Amazon is simply creating attention-grabbing headlines. Either way, Amazon has brought the subject of crowd-sourced delivery to everyone’s attention, and encouraged us to have a discussion that really is worth having.
Andy Hill, Electio
Amazon has spoken of and trialled several delivery innovations in the past, most notably drones and a partnership with Uber. Now the global organisation is embarking upon a crowd-sourced venture whereby any consumer could sign-up to become part of the retailer’s delivery chain.
I mentioned in my initial interview with eDelivery on this topic that this sounds like another example of a peer-to-peer delivery network, the likes of which have taken off particularly well in the US and Scandinavia One of the companies currently testing the waters in the UK is Postio.uk.
One of the reasons I suspect Amazon is looking at peer to peer delivery is to cope with demand and to strengthen ecommerce growth. Amazon in particular is out-stripping parcel carriers’ capacity so they need to create their own capability to delivery orders, and P2P is a low cost way of doing this without investing further in their own infrastructure.
Sharing services are a hot topic at the moment, with Blah Blah Car also launching recently. Although nothing to do with delivery, it does still operate on the basis that the public are willing to share the load in order to save a bit of money.
For Amazon though, its crowd-sourced experiment is all taking place in the US and the trials are shrouded in secrecy. So we’ll have to wait to see whether there proves to be a real appetite for this type of service, and also whether it can be integrated effectively into its existing business model.
As an industry there are several things we’ve identified as possible stumbling blocks, but the two questions I’m most interested to see answered are:
- What benefits will there be for customers using this service – will it simply come down to lower prices?
If so, how will the cost of paying the driver for delivery balance out against the small sum paid by the shopper. The customer service isn’t going to be quite as slick as professional couriers, so price and speed is the key selling point here. - How will Amazon maintain its excellent customer service during the last mile of delivery? It will surely be crucial to establish a degree of accountability for the driver, in order to keep standards high. In which case, the rewards will need to be significant for the driver to keep them coming back and seeking great reviews.
The crucial point, referred to by my industry colleague Patrick Tame, who also spoke to eDelivery, is that delivery doesn’t have a terribly high return on investment for a driver. They will likely make less than a couple of pounds per delivery unless Amazon alters its model. This means people would need to be delivering several parcels in order to make any sort of money.
It will also be interesting to see how Amazon offers this as a choice to customers. Perhaps it will be a cheaper option in the shopper’s basket for low-value items, or maybe those who deliver parcels will receive money-off vouchers for their own purchases.
It is too early to say whether peer-to-peer delivery will prove a hit with UK consumers – or, more importantly, whether they’ll want to become couriers themselves. Regardless of the outcome, I don’t foresee this ever overtaking the existing carrier/courier model as the preferred delivery option. Customers will always want a wide range of options to choose from, with varying levels or price and security. DPD’s tracking capabilities, for instance, are in a different league to anything Amazon could offer with On My Way, and Royal Mail will always deliver to the most remote locations.
That said, I do think this type of delivery will grow in popularity in the next few years and simply become one part of a wide-ranging network of choices. Crowdsourcing is a popular model across a number of industries and there are clear benefits to asking the wider public to participate in the delivery process. Definitely one to watch!
