Multi-parcel crowdsourcing logistics and last-mile delivery: an economic analysis

Purpose: In recent years, B2C e-commerce has been increasing in many countries and in different industries. If compared to the offline market, e-commerce introduces significant logistics challenges for retailers selling products, e.g. the management of the last-mile delivery (LMD). This process is very critical in terms of both efficiency and effectiveness. On the one side, it is very expensive, due to the low order dimension and the dispersed destinations. On the other side, expectations of online customers in terms of quality of the delivery are increasingly stringent. Among the options proposed to efficiently and effectively cope with B2C deliveries, crowdsourcing logistics (CL) has been recently gaining the attention of both academics and practitioners. It consists in outsourcing logistic activities to a network of “common” people, who give their availability on a voluntary basis. Among the different CL paradigms, one that appears to be still under-investigated in the literature – despite its successful implementation by numerous online players – is the “multi-parcel”. In this model, each rider performs a delivery tour in which he/she accomplishes a set of deliveries assigned by an e-commerce player. This study aims at investigating the implementation of multi-parcel CL model to LMD, and at analysing the impact it has on delivery costs, if compared to traditional by-van deliveries. Research approach: In order to reach the research goal, two steps are performed. First, it develops an analytical model that – after the generation of customers’ demand and the assignment of deliveries to the available riders – computes the CL delivery costs. In addition, also the costs associated to traditional van-deliveries are computed, to compare the two options. Second, the model is applied to a realistic case in Milan, Italy. To support the model development and application, three additional methodologies were used (literature review, semi-structured interviews with practitioners and analysis of secondary sources). Findings and originality: The application of the model shows how multi-parcel CL entails significant benefits in terms of delivery cost reduction, if compared to the traditional van solution. More in detail, if considering the overall delivery area, it allows saving about 11% of the van delivery cost. Research impact: On the academic side, this work contributes to the extant knowledge about CL for LMD. It develops and apply an analytical model to compare delivery costs of multi-parcel crowdsourced deliveries to those of the traditional van-fleet operating mode. Therefore, it allows drawing quantitative insights about a CL paradigm that – even if identified as promising by both practitioners and academics – was mainly addressed in literature by means of high-level qualitative methodologies. Practical impact: On the managerial side, this paper offers a useful tool to practitioners selling products online. As a matter of fact, they may rely on the developed model to set economic analyses aimed at evaluating the convenience of implementing multi-parcel CL in LMD