Research by Valentina Carbone, professor at the Paris Campus of ESCP Europe, Aurélien Rouquet, professor at NEOMA Business School and Christine Roussat, assistant professor at the Clermont-Auvergne University in France, examines how crowd logistics differs from traditional logistics service models and which type of crowd logistics might be the most disruptive.
Crowd logistics
Crowd logistics is done through collaborative platforms and mobile apps that connect individuals and firms to peers (travelers, movers, authorized drivers, owners of empty storage spaces, etc.) in order to make the best use of distributed, idle logistics resources and capabilities. The main difference with traditional model is that crowd logistics calls on individuals, mostly amateurs, to perform basic logistics services on an ad hoc basis.
Based on a review of the websites of 57 crowd logistics initiatives, the researchers identify four types of crowd logistics:
- crowd storage
- crowd local delivery
- crowd freight shipping
- crowd freight forwarding.
One of the authors, Aurélien Rouquet, explained to Supply Chain Quarterly Editor Susan K. Lacefield what they discovered about crowd logistics.
Aurélien Rouquet: “We have been investigating the logistics aspects inherent in the sharing economy. This economy is booming, but it seems to underestimate the importance of controlling the physical flows it generates. In our first study, we identified four types of logistics characteristic of the collaborative economy: business logistics, peer-to-peer logistics, open logistics, and crowd logistics. The second stage of our research focuses on the logistics type that we considered to be most promising: crowd logistics.
Our definition of crowd logistics highlights three features. The first is the fact that crowd logistics relies on amateurs rather than logistics professionals. The second is that it relies on resources that are spread among the crowd and are underused or even unused. This is extremely different from traditional logistics with its dedicated infrastructure (warehouses, trucks, boats, etc.). The final key feature is that this type of logistics has been enabled by the development of digital technologies, such as mobile apps. Crowd logistics does not rely on traditional corporate information systems, such as enterprise resource planning (ERP) systems or electronic data interchange (EDI)”.
Professionals versus amateurs
Crowd logistics, as the researchers define it, is based on a crowd of amateurs rather than professionals, even though the boundary is becoming blurred. Some crowd logistics firms use traditional marketplace models, and some traditional businesses are investing in these startups. And, the difference between the amateur individual and the self-employed courier is small.
Aurélien Rouquet, explained to Supply Chain Quarterly: “We believe that crowd local delivery is the most promising segment for two reasons. The first is that there is currently a great demand from city dwellers for cheap, personalized, and rapid delivery services. This is just the type of service that crowd local delivery firms are offering. They are using the crowd to make themselves more competitive than traditional logistics service providers, and they are offering brands, which are increasingly looking to develop multichannel distribution methods, a more flexible, modern, and attractive model.
The second is that the resources on which these services are based are widely available and possessed by a wide range of people; in towns, everyone moves around all the time and can easily take a parcel with them! So there is great potential for innovation and development in the field”.
Threat and opportunity
Crowd logistics is a threat because the crowd can replace traditional logistics providers and reduce their market share. But crowd logistics also provides an opportunity to develop new activities. DHL, for example, has tested a service of this type in Sweden (MyWays).
Aurélien Rouquet: “For retailers the risk is that, with the emergence of crowd local delivery firms, they will lose their direct link with the consumer, which is strategically vital. A firm like Instacart is looking to position itself as a new intermediary between consumers and traditional retailers. The risk for the retailers is that they might become just suppliers, where Instacart’s shoppers will go to shop for their clients”.
Read the full interview here: CSCMP’s Supply Chain Quarterly
Read the paper here: “The Rise of Crowd Logistics: A New Way to Co-Create Logistics Value” Published in the December 2017 issue of the Journal of Business Logistics.