15 October 2018 marked the end of the two-years master’s program in Transport, Infrastructure, and Logistics at the TU Delft of Satrio Wicaksono. Satrio asked me, Jos Sluijsmans, to be one of his supervisors in his research on the potential of bicycle crowdshipping in The Netherlands.
Could crowdsourced bike courier (bicycle crowdshipping) reduce our reliance on conventional delivery vans?
The growth of ecommerce has lead to significant increase in direct-to-customer delivery and its associated last mile. People are getting more inclined towards online shopping: With fingertips they scroll through their favorite e-shops, click the ‘buy’ button, and wait until the orders are delivered at doorstep the next day. For customers, ecommerce might increase the convenience of shopping. However, how does this trend altered logistics activity behind the screen?
Speedy delivery in ecommerce requires high frequency shipment with lower volume per delivery. An article at Huffington post has shown that such type of delivery comes at an environmental cost. Rush deliveries would break the efficiency of goods transportation because there is no time to consolidate. Aside from its environmental effect, more delivery vans roaming in the city means more congested and noisy urban areas.
Bicycle crowdshipping emerged as a solution for the future challenge of urban parcel delivery. The term “crowdshipping” itself means utilizing the existing capacity of travelers in the transport network to also carry goods along their journey. Crowdshipping is highly potential for ecommerce delivery as it deals with the package in individual way and offers flexible delivery condition. In the Netherlands, 2.8 million cycling trips are made daily, and this would become an enormous ground to develop a network of crowdsourced bike couriers.
However, bicycle crowdshipping also has a particular challenge. The concept is reliant mainly on two stakeholders; a network of couriers that serve the delivery (supply) and a pool of customers (demand) to feed the couriers. The failure to assure the balance between these two would cause either unreliable service or unattractive platform, putting its sustainability to a vulnerable state.
A research was conducted to help crowdshipping platform in understanding its supply and demand and identifying factors/service features that are essential to retain its network. Furthermore, the research will show how information on crowdshipping supply and demand could be used to estimate its potential market penetration. Below are the study’s key takeaways.
Potential market scope
Bicycle crowdshipping shares some similarities with conventional bike couriers, therefore the possible market scope would also be comparable. With regards to spatial scale, bicycle crowdshipping has the potential to step into local and last mile delivery. In the first scope, it could cooperate with local stores that provide ‘click and collect’ service to offer a convenient home delivery service. In the latter, bicycle crowdshipping could establish partnership with urban distribution centers and parcel pickup points to connect the last mile of the parcels. Benchmarking currently operating services revealed that many of the crowdshipping services focus on diverse product types compared to niche market such as groceries and food.
Bicycle crowdshipping is different from other delivery services since it could offer delivery in a fast and personalized way. In that sense, the crowdshipping platform is responsible to match customers to the suitable courier in order to meet the promised service level. Moreover, the platform is also responsible for determination of pricing/compensation scheme that assures a sustainable operation. Preceding studies discovered that crowdshipping users and couriers were also motivated by altruistic values such as eagerness to preserve the environment or willingness to help the neighbors.
Alongside with cost and speed, crowdshipping customers highly appreciate the provision of adjustable delivery time window. For such feature, they are willing to spend 2.23 euros more. Interestingly, providing information on CO2 emission savings would also stimulate customer to select bicycle crowdshipping. Customer would compensate 1 euro for every additional kg of CO2 savings. These two features are key differentiation to be emphasized by any bicycle crowdshipping service. On the supply side, any additional travel time to deliver package (in minute) would require 40 cents of compensation.
Demand and supply sensitivity
Customers’ preference was found to be highly sensitive towards price of the service. This means increasing the price would severely affect the number of demand. On the contrary, traveler’s intention to participate in delivery was not as sensitive towards monetary compensation. This requires crowdshipping platform to find more creative ways in stimulating courier participation, such as through maximizing drop factor per courier or optimizing delivery route.
Market share potential
A case study using cyclists in Delft as sample discovered market share of 14-26% if at least 0.5% of the cyclists would register themselves as an occasional courier. The study revealed that along with the increased membership rate in bicycle crowdshipping platform, the price will go down and the market share would increase. (Moderate) competition effect between bicycle crowdshipping and conventional shipping was evident, implying that bicycle crowdshipping should be responsive to market dynamics by adjusting its service level. This way bicycle crowdshipping would retain its competitiveness with other delivery options.
Bicycle crowdshipping would be a potential alternative for the future of urban parcel delivery, especially in the Netherlands. Understanding the supply and demand characteristics is essential for any bicycle crowdshipping platform to sustain its network of customers and couriers.
A complete version of the study can be obtained through this link.