Don’t Fake It If You Can’t Make It: Driver Misconduct in Last Mile Delivery

42 Pages Posted: 1 Jul 2022 Last revised: 5 Jul 2022

See all articles by Srishti Arora

Srishti Arora

INSEAD

Vivek Choudhary

Nanyang Technological University (NTU)

Pavel Kireyev

INSEAD

Date Written: July 1, 2022

Abstract

In the last two decades, last mile delivery (LMD) firms have seen immense growth due to the rise of e-commerce and digitalization, leading to faster and cheaper deliveries. However, this growth has also resulted in new challenges such as increased competition amongst LMD firms and heightened customer expectations. Operating on thin margins, LMD firms strive to be efficient in successfully delivering orders in their first attempt because reattempted deliveries are costly in terms of lost revenues, reverse logistics costs, and reputation. A key reason for delivery failure is the misconduct of delivery workers (field executives, or FEs). For instance, a FE can claim that ‘the customer was not available’ without even visiting the customer’s address and record this claim as the reason for delivery failure (i.e., a fake remarked delivery). So far, few studies have explored the impact of FEs’ behavior on LMDs’ efficiency. Most attempts at improving LMD performance focus on technical enhancements and incentive designs, assuming workers will follow the designed processes precisely. However, this assumption may not hold, especially for LMD firms that mostly employ gig workers. To study and quantify the impact of FE misconduct on LMD performance we collaborated with one of the largest LMD firms in India. Using instrumental variable regression, we identify the effect of fake remarked deliveries on future productivity. Our results suggest that operational losses due to fake remarks on a given day spill over to the subsequent day, by reducing the next day overall success rate of deliveries by 1.5%. This decrease is mostly driven by the reduction in first-time-right deliveries, resulting in significant revenue losses for the LMD firms. We find evidence that opportunistic circumstances, such as familiarity with the delivery area and cash on delivery parcels, exacerbate the detrimental effect of fake remarks. We present some of the first results on the impact of aberrant behaviors on workers’ productivity in last mile logistics.

Keywords: Last mile Delivery, Platform Economy, Misconduct, Productivity

Suggested Citation

Arora, Srishti and Choudhary, Vivek and Kireyev, Pavel, Don’t Fake It If You Can’t Make It: Driver Misconduct in Last Mile Delivery (July 1, 2022). INSEAD Working Paper No. 2022/32/TOM/MKT, Available at SSRN: https://ssrn.com/abstract=4151409 or http://dx.doi.org/10.2139/ssrn.4151409

Srishti Arora

INSEAD ( email )

Boulevard de Constance
Singapore
Singapore

Vivek Choudhary

Nanyang Technological University (NTU) ( email )

College of Business, NTU,
Singapore, 639798
Singapore

HOME PAGE: http://sites.google.com/view/vkchoudhary

Pavel Kireyev (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

HOME PAGE: http://www.pavelkireyev.com

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