Peer-to-Peer Crowdshipping as an Omnichannel Retail Strategy

48 Pages Posted: 12 Feb 2018 Last revised: 11 Nov 2019

See all articles by Ho-Yin Mak

Ho-Yin Mak

University of Oxford - Said Business School

Date Written: February 7, 2018

Abstract

Crowdshipping is an emerging operations model proposed to tackle the last-mile delivery problem for online and omnichannel retailers in urban markets. Major retailers such as Amazon and Walmart, as well as start-ups such as Instacart and Deliv, have adopted or experimented with variants of crowdshipping models. Peer-to-peer crowdshipping, i.e., using in-store customers as a resource to deliver online orders), carries important implications on the marketing-operations interface for omnichannel retailers: on the one hand, it offers the opportunity to improve last-mile delivery efficiency (the efficiency effect); on the other hand, it provides an additional tool for the retailer to price discriminate between the online and in-store channels (the pricing effect). We model an omnichannel retail network's pricing decision for its online and in-store channels, and consumers' decisions on purchase, channel choice and participation in crowdshipping. Contrasting two reimbursement modes for crowdshipping, i.e., reimbursing shopper-deliverers their incurred delivery costs or providing an additional premium as a (cross-channel) subsidy, against a store-operated delivery model, our analysis reveals that the potential benefits of crowdshipping to the retailer and consumers depend upon the interactions between the aforementioned efficiency and pricing effects. In particular, whether the efficiency effect benefits the firm depends on the availability of shoppers with low value of time; whereas the pricing effect benefits firms selling high-end products. The impact on consumer surplus of the two effects, however, depend on spatial store density. All in all, peer-to-peer crowdshipping can lead to significant win-win outcomes in dense urban markets for high-end items.

Keywords: Crowdshipping, omnichannel retail, sharing economy, last-mile logistics

Suggested Citation

Mak, Ho-Yin, Peer-to-Peer Crowdshipping as an Omnichannel Retail Strategy (February 7, 2018). Available at SSRN: https://ssrn.com/abstract=3119687 or http://dx.doi.org/10.2139/ssrn.3119687

Ho-Yin Mak (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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