Collaborative Logistics: Ripe for Disruption

I am frequently asked what sectors I think will be next in terms of being disrupted by collaborative business models. Pet care? Mortgages? Parking? It’s a hard space to crack but I think 2015 will be the year we see some big things happen in collaborative logistics, especially shipping.

A useful lens I have developed to identify big opportunities is to look at where two key problems exist:

Problem                                                                     Solution
Lots of waste in a system                                            Efficient use of assets

Asset heavy business                                                   Asset light network

 

Look at most leading ideas in the space and you will see the above lens in action – using technology to create access to an abundant source of underutilized assets to create a new offering through an ‘asset light model, akin to the likes of Airbnb, Liquidspace and Lyft.

Logistics: A Big Opportunity

‘Crowdshipping’ startups such as Deliv, Nimber, and MeeMeep can flip this model into an asset-light solution by providing access to a network of drivers and vehicles that already exist with underutilized capacity.

Logistics, particularly shipping solutions, are rife with waste. Consider something simple like empty return trips drivers make or empty space containers not fully loaded with goods. On top of this, the likes of UPS, DHL, FedEx and even traditional postal services require asset heavy models from the fleets of vehicles to the maintenance staff to parking tickets and warehouses.

Note: A point that is often missed in discussions around collaborative and sharing models is that we still need companies to create and manage assets and infrastructure. Where start-ups are causing disruption is around how these assets can be accessed and deployed.

Incumbent Move: DHL MyWays
An interesting move is being made by DHL who recently launched a peer delivery model called MyWays. The model taps into the crowd to change how they can address ‘last mile’ delivery problems and enter into new fast growing markets without existing logistics infrastructure.

Existing Supply
The way crowdshipping  works is very similar to most collaborative models. A user (an individual or a business) has a need – ‘I want something shipped’ and the platform provides access to a network of  existing ‘providers’ who can fulfil that need on-demand. The supply often consists of three different forms:

  1. Sub-contractors of mainstream brands such as Allied Express, StarTrack and DHL who, at best, earn 30 per cent of the face value of a delivery job but often far less than this amount.
  2. ‘Professional’ drivers employed by traditional courier companies who have a lot of idling capacity from downtime between jobs to empty space in their vans to idle return trips after dropping a parcel.
  3. Casual’ drivers, such as university students, retirees or freelancers  with a car and some time who are looking to make extra income.

Massive Demand
Not only are the problems (waste, asset heavy) and the collaborative marketplace model easily applied, the beauty of logistics is there is massive existing demand that start-ups can tap into. Here are six big areas:

  1. Immediate delivery: businesses such as dry cleaning or restaurants where having their own delivery personnel are simply not cost effective.
  2. Moving: from entire houses to moving a sofa to your friend’s house
  3. Fragile or expensive goods: categories of goods from artworks to pets where knowing that your expensive painting or precious cat is going in the back of x vehicle with driver ‘Sam’ is an attractive proposition.
  4. White goods and large items: from fridges to furniture, a lack of cost-efficient options exist
  5. Online auction marketplaces: where ‘last mile’ solutions limit the buyer/seller radius
  6. Local retail stores: lack flexible and cost-effective shipping solutions to compete with online

I recently wrote a piece for the Australian Financial Review on the opportunity of these platforms to change the way goods are delivered. You can read it here:

Crowdshipping: using the crowd to transform delivery

There are lots of different start-ups launching in this space with a slightly different target market. Here is a snapshot of some interesting ventures (note some are playing across the needs I have mapped here). I am honestly surprised by the number in the traveller space, which would seem the smallest and strangest slice of the market.

Missed any? Please add to our directory or email us at directory@collaborativeconsumption.com.

SNAPSHOT

 

It easy to list all the things that could go wrong with these emerging crowd-driven shipping solutions; damaged or missing packages, privacy concerns and say delivery delays. And like most collaborative models, the core question is who is responsible when something does happen?

But I am convinced that logistics space will see a breakout player because the relationship between demand (I need something shipped/moved/delivered) and supply (I can deliver) is inefficient and in many instances broken. And where there is pain and problems, entrepreneurs with a collaborative mindset will step in to create new efficiencies that can disrupt the market.

Some further resources

 

 

 

7 thoughts on “Collaborative Logistics: Ripe for Disruption

  1. How about integrating transactions in general? Orders have shipping stipulations that can be fulfilled by anyone meetin simple criteria. Competition should not be between start ups / companies, but directly, between any entity.

  2. Another great example of disruption in markets where the traditional mainstream brands will lose out if they don’t adjust quickly. Changing course for these guys is often difficult for 2 reasons 1. the existing revenue model is too rigid and reliant on large infrastructure and 2. the value they offer is limited to the shippers SOPs and not natural, human desires to serve and adapt to feedback.

  3. I have some objections as a logistics professional with 20 years experience… logistics is the game for efficiency so it is very hard to beat the asset heavy systems on prices with single person or single vehicle. I do not deny the collaboration opportunitiy but in my opinion it will be logical for fast deliveries or valuable cargo and of course locally… when you take the system to international then you are targeting customs payments not freight cost. I am using the same thing for years for my iphone purchase from us and one of my friend is bringing the product to me. they always buy themselves and see what is inside the package… picking up a package from a location and moving it internationally is never worth the risk. one narc dog might cost you 20 years of life and any explanation that you don’t own the cargo won’t be heard. I am sure all these website owners started these project with all good intensions but any of us could be a mule for international smuggling without knowing… I don’t believe there will be anything the website owner can do to get me out of jail 🙂 please consider all risks before moving any package…

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