With mounting fulfillment costs and increasing expectations around delivery speed, crowdsourced delivery models are playing an important role in bringing together retailers, products and consumers.
Crowdsourced delivery is an emerging delivery model which uses networks of local, independent couriers for delivery. Partnering with delivery intermediaries continues to grow as retailers hope to build their digital capability. While most common in the foodservice sector, it is now being adopted by grocery retailers. The last two years have seen the proliferation of partnerships between retailers/brands and crowdsourced intermediaries to meet consumer expectations around fast fulfillment without the need for investment in their own infrastructure and delivery fleets. From our benchmarking analysis of leading global crowdsourced intermediaries, over 80% offered delivery in as fast as one hour, speeds currently not possible for most retailers on their own. Retailers must consider trials with intermediaries if they are to tap into this growing part of the market.
Recent partnerships include Carrefour’s tie up with Rappi in Brazil (April 2019), Glovo in France, Spain, Italy and Argentina (July 2019) and Supermercato24 (December 2018.) Walmart is heavily involved with crowdsourced intermediaries, partnering with Postmates and Doordash (US) in April 2018. The adoption of these 3P last-mile delivery networks will continue to play an important role in reshaping the retail landscape.
Key brands are also partnering such as Kellogg’s/Deliveroo in the UK (October 2019) and Nespresso/Glovo in Spain (October 2019.)
The way retailers and brands are executing this varies, with three main types of fulfillment model; consumer facing grocery intermediaries, consumer-facing on-demand intermediaries and intermediaries providing back-end support.
Crowdsourcing can support retailers at different stages of ecommerce maturity
The flexible nature of crowdsourced delivery intermediaries means they will continue to be of relevance to retailers as their ecommerce businesses mature.
Retailers in the very early stages of ecommerce, looking for a low-cost and resource-light delivery model - such as the discounters - have turned to crowdsourced intermediaries to own the full online delivery experience, e.g. Aldi’s Instacart partnership in the US, and Lidl working with Shipt and Buymie in the US and Ireland, respectively.
Retailers with longstanding ecommerce operations such as Tesco and Carrefour are more reliant on internal delivery models, given they have spent time and money establishing and refining these processes over the years. However, these businesses are now starting to test crowdsourcing pilots and partnerships to evolve their ecommerce speed and convenience.
Walmart, which has a more mature ecommerce business with over USD44bn sales online globally, leverages a hybrid delivery model, seamlessly integrating its own online delivery with a variety of different crowdsourced partners and innovative last-mile solutions.
Recommendations for retailers and brands
1. Strategy: Align internal structures to support the utilization of crowdsourced intermediaries as another route to the consumer
- Brands must align internal ecommerce teams to support the adoption of crowdsourced intermediaries. Increasingly, brands should consider setting up teams tasked with going direct- to-consumer through consumer facing on-demand intermediaries such as Deliveroo and Uber Eats.
- Retailers must choose the right fulfillment partner based on their position along the ecommerce maturity curve.
2. Execution: Treat crowdsourced intermediaries as a new route to the consumer, with their own requirements for search optimization, product content management and assortment
- Brands must dedicate resources to optimizing their presence on the digital shelf of consumer- facing crowdsourced intermediaries. They must optimize the assortment for impulse/top-up shopper missions and product content management, including photos and search, as intermediaries enhance their digital shelf capabilities.
- Retailers partnered with on-demand intermediaries must carefully curate their assortment to cater to impulse/top up shopper mission and ensure consistent product availability considering the fast fulfillment nature of these services (usually 30-60 minutes.)
3. Performance: Drive performance and availability of key SKUs listed on intermediaries through inclusion in local promotional schemes, and fulfillment optimization
- Brands must drive SKU performance by seeking inclusion in local promotional programs, such as free shipping, on consumer-facing on-demand intermediaries.
- Brands must ensure compatibility with emerging fulfillment models, with intermediaries developing their own dark stores, and hybrid models emerging such as Carrefour/Rappi dark stores in Brazil.
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