Will we see the 'uberisation' of the delivery market?
Mar 01, 2017
By Matthew Robertson, Co-CEO, NetDespatch.
Technology has transformative powers. It's not just enabling better ways of doing things but also driving the development of new products and the provision of new services.
With the advent of the Internet of Things there is barely anything in our modern world left untouched by technology. Each and every industry is being revolutionised by technology, and the carrier industry, being powered by the growth of ecommerce, is no different.
Data from the Ecommerce Foundation shows that ecommerce in the UK was worth 157 billion euros in 2015. This has direct repercussions for carriers with the number of parcels travelling through the supply chain increasing year-on-year. During the peak period of 2016, we were noticing heights of 3,700 orders per minute across the NetDespatch platform. All of this demonstrates that consumers are becoming more engaged with ecommerce than ever before, and this trend shows no sign of slowing.
Carriers are being challenged to innovate and develop in what has become a highly competitive industry. Our recent research revealed that next day delivery is a top priority for consumers and 88% of those surveyed stated that they would be prepared to pay for a one or two day parcel delivery service. In addition to this, same day, Sunday deliveries, evening deliveries and a whole array of delivery destinations for the delivery driver are becoming increasingly available for consumers. This is certainly presenting new challenges for carriers, not to mention an escalating demand for more and more delivery drivers.
The industry however is facing a national shortage of delivery drivers. The combined impact of an ageing professional HGV driver workforce and the lack of new entrants coming through to replace those who leave the sector as a result of retirement or to pursue different careers is taking its toll. Sadly, not enough young people are considering driving as a career option. There are several reasons for this including the cost of licence acquisition, lack of understanding of the sector, poor sector image, driver medical requirements and low quality driver facilities.
What can carriers do? One idea that is being discussed is the 'uberisation' of the delivery driver. Uber of course has transformed the taxi industry. It's secret? It's easier and cheaper to use than a traditional taxi service. Uber drivers use their own vehicles to taxi passengers to their destination. This concept has already spread to different industries with the introduction of UberRush and UberEats, spinoffs of Uber's ridesharing business that deliver packages and restaurant orders in major cities. Could we also be witnessing the beginning of the uberisation of the delivery driver?
Amazon has already turned to amateur drivers to make deliveries in their spare time, and with last mile delivery becoming even more critical, its important carriers strive to gain advantage over their competitors. In light of this traditional retailers are embracing an omnichannel approach, and with the variety of delivery channels available, including but not limited to; store, home and work, retailers and carriers must collaborate efficiently with delivery drivers to ensure the most successful and streamlined processes. Our own 2016 delivery research revealed that 78% of consumers are now choosing alternative delivery options for their goods such as lockers, convenience stores, the Post Office and Click&Collect.
That said, can the uberisation of the delivery driver really work? Will retailers be prepared to place their trust in freelance delivery drivers and rely on them to provide a professional service during the last mile, when excellent customer experience is such a critical reflection of the retailer themselves?
Going back to our research, we asked participants what the most important elements of a positive delivery experience were. 33% of those surveyed ranked having the ability to track their parcel online first, while 27% ranked having an exact window for delivery and 25% ranked being notified of the steps in the journey. These tools, empowered by technology, have become integral aspects of the supply chain process and freelance drivers may not have the technology or means to be able to offer this. Additionally, carriers may not have the capacity to train freelance drivers to use various mobile devices and other delivery technology. Therefore, they need to think about whether they can ensure the customer experience will be a positive one.
Perhaps, instead of enlisting the help of freelance delivery drivers, carriers should focus on streamlining their processes more in order to make less physical deliveries but increase the number of parcels. On average, say a delivery driver makes between 60 and 80 deliveries a day. By taking advantage of local collect stores, lockers, Click&Collect and so on delivery drivers can drop off a large percentage of their parcels in one go at one location, instead of travelling to multiple different locations.
Without drastically increasing the number of drivers employed, expecting to be able to meet new parcel delivery goals is going to be extremely challenging. Seeing as there is no quick fix for this, perhaps carriers must look at other options available to them. Whether this means hiring freelance drivers or streamlining the delivery process, they need to find a workaround, otherwise there will be a lot of disgruntled consumers.
