Understanding "Crowd Logistics" | Quarter 1 2018, Issue of Supply Chain Quarterly
Print this Article | Send to Colleague
Research for the Real World | Reprinted from the Quarter 1 2018, Issue of Supply Chain Quarterly
New research examines how crowd logistics differs from traditional logistics service models and which type of crowd logistics might be the most disruptive.
The Journal of Business Logistics (JBL), published by the Council of Supply Chain Management Professionals (CSCMP), is recognized as one of the world's leading academic supply chain journals. But sometimes it may be hard for practitioners to see how the research presented in its pages applies to what they do on a day-to-day basis. To help bridge that gap, CSCMP's Supply Chain Quarterly challenges the authors of selected JBL articles to explain the real-world applications of their academic work.
THE ARTICLE
"The Rise of Crowd Logistics: A New Way to Co-Create Logistics Value," 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. Published in the December 2017 issue of the Journal of Business Logistics.
THE UPSHOT
Since 2010 a flurry of startups have attempted to adapt the "Uber" or "Airbnb" model of crowdsourcing to logistics services. While much has been written on this development by the media, consultants, and industry analysts, this article by three professors from business schools and universities in France is the first academic paper that takes a close look at the emerging business model. As such, the article provides the first conceptual definition of what the authors call "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 authors also delineate how crowd logistics differs from more traditional logistics service models, the main difference being 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 paper goes on to identify four types of crowd logistics: crowd storage, crowd local delivery, crowd freight shipping, and crowd freight forwarding. It hypothesizes that crowd local delivery has the biggest potential to be disruptive to traditional business models. One of the study's authors, Aurélien Rouquet, explained to Supply Chain Quarterly Senior Editor Susan K. Lacefield what they discovered about crowd logistics and how these findings could be applied.
What was the impetus for your research?
I began this research program with my two co-authors, Valentina Carbone and Christine Roussat, three years ago. 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, which is published in the Journal of Business Logistics, focuses on the logistics type that we considered to be most promising: crowd logistics. Although many researchers have investigated crowdfunding and crowdsourcing, the logistics and supply chain management literature is almost devoid of work on crowd logistics. So it was exciting for us to be the first to explore this field.
How does crowd logistics differ from traditional business 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).
What do practitioners need to know about the four main types of crowd logistics?
We believe two things need to be noted by practitioners. The first is that crowd logistics firms can provide four major types of logistics services: crowd local delivery, crowd storage, crowd freight shipping, and crowd freight forwarding. The second is that each type of crowd logistics service creates a different type of logistics value.
For example, crowd storage relies on real estate resources, such as cellars and garages, to offer local storage services to city dwellers. Crowd freight forwarding relies on other resources related to individual mobility, such as air or sea travel, to make products that are unavailable in a given country accessible economically or to transport goods. So, each crowd logistics service uses different crowd resources and offers the client a different value proposition.
Why did you choose to exclude some of the companies, such as Cargomatic and Shyp, that are often identified as "Uber for freight" from your study?
Crowd logistics, as we define it, is based on a crowd of amateurs rather than professionals, even though the boundary is becoming increasingly blurred. The two firms that you mention do not call on individuals. Cargomatic can be likened to a marketplace that uses new technologies to transform contacts with logistics service providers. Shyp uses professionals and offers logistics services to facilitate peer-to-peer transactions that have increased enormously with the sharing economy (for example, the types of transactions that occur on eBay). These two firms do indeed propose a form of logistics "uberization," in the sense that they use digital technologies to rethink logistics practices, but not in the precise field of crowd logistics as we have defined it. But it is interesting that the boundaries between these activities are 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 often tenuous!
In your paper, you and your co-authors predict that crowd local delivery will have the strongest disruptive impact. Why do you believe that to be true?
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. Moreover, it is clear that firms such as Deliv, Postmates, and Instacart have already reached a significant size.
What impact could crowd logistics have on logistics service providers and their customers?
Crowd logistics is both a threat and an opportunity for logistics service providers. They are a genuine 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. For that reason, service providers can look to include crowd delivery services in their offerings. They are better able to do so if they are positioned as "4PL providers," since by definition they have the skills to orchestrate logistics resources, which are precisely the skills needed by successful crowd logistics firms. DHL, for example, has tested a service of this type in Sweden, called MyWays.
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.
What does an academic look at crowd logistics provide that could not be found in other types of analyses or media coverage?
An academic analysis provides multiple benefits. First, in methodological terms, our analysis is thorough, detailed, and, of course, is in no way biased by private interests. We are not here to promote crowd logistics or sell our services, and we provide an objective view of the subject. Second, the value of our approach is that it relies on a systemic analysis, sustained by our knowledge of logistics, logistics operators, and, more broadly, management science. For example, our analysis here is based on a theoretical framework, that of the service-dominant logic. This leads us to propose an original approach to crowd logistics in terms of value co-creation and, above all, to develop theoretical proposals about the boom in crowd logistics.
How has the crowd logistics market evolved since the article was written?
The crowd logistics market is very unstable, and it is difficult to monitor its rapid changes. Since our paper was published, we have observed numerous company creations and failures and mergers between startups. However, the most interesting trend is the fact that traditional players are buying up firms operating in this segment. For example, the French Post Office bought the crowd delivery service Stuart in 2017.
How can practitioners use the information discussed in your paper?
Professionals can use the information in our paper in two ways. First, traditional firms can use it to develop an overall strategy with regard to crowd logistics: Which crowd logistics services can I call on? What startups are currently in this market? What opportunities and threats does it represent for us? Meanwhile, firms that are entering the crowd logistics market can use the paper to develop a successful strategy in this extremely competitive market.
