If you’re shopping for holiday gifts and the checkout clerk asks you to deliver a package to another person’s house on your way home, would you do it?
 
Jeff Ohlmann, associate professor of business analytics in the Tippie College of Business, studies whether this crowdshipping— the use of individuals who are not store employees to deliver merchandise ordered online— would be an effective way for local businesses to compete with companies like Amazon.  

“Customers expect fast delivery, often within hours,” said Ohlmann. “But how do businesses that don’t have Amazon’s economies of scale do that without driving costs up?” 

He said shoppers who complete deliveries would be compensated with a gift card or some other incentive, and similar programs have been piloted by companies such as Walmart, Target, Home Depot, and the French grocery chain Carrefour. While it may seem unconventional for a store employee to ask a customer to run a delivery errand, Ohlmann said it could work in some circumstances. 

One of his recent studies examines how much in-store shopper participation is required to reduce the costs of delivering online orders. Computational simulations suggest that in-store crowdshipping can reduce delivery costs and delivery time if at least 5% of in-store shoppers agree to make deliveries that extend their trip home by up to 30 minutes.  

An in-store shopper delivery service would also cost money to set up because shopper/drivers would need to be registered and screened. The challenge for the business is developing a population of in-store shoppers who participate often when they visit stores and are willing to detour from their direct route home.

“If there isn’t a steady supply of crowdshippers, it may not justify the cost of the managing the service,” Ohlmann said. 

Given the low probability of always having enough drivers, another option is to form a joint delivery platform that consolidates customer orders from participating businesses to achieve the scale necessary for more cost-effective delivery. Ohlmann said this concept was inspired by the shopIN.nyc warehouse, which pools inventory from several local vendors to mimic the product availability of an Amazon fulfillment center. 

Orders consolidated from several local businesses can then be served by a combination of a dedicated fleet and gig workers available for relatively short periods of time, not unlike Uber or DoorDash. Ohlmann said utilizing gig workers during busy times would allow the platform to make timely deliveries while minimizing the size of a dedicated fleet.

Media contact: Tom Snee, 319-384-0010 (o); 319-541-8434 (c); tom-snee@uiowa.edu