How Partners like Dropoff are Disrupting Courier Services and Stimulating Competition
The shipping and logistics industry has faced many disruptions in recent years, most especially owing to the global supply chain crisis felt during the COVID-19 pandemic.
While emerging technologies and optimizations to last-mile delivery services have been able to alleviate some of the stress from time-to-time, the industry as a whole still faces immense pressure.
Last-mile delivery services in particular are still facing numerous hurdles, and it’s important for them to find new ways to compete and provide customers with the best possible service.
In this article, we’ll explore how custom courier services like Dropoff are disrupting the industry and stimulating more competition in delivery services across the United States.
The Rise of Independent Gig Couriers, and Their Problems
As delivery companies like FedEx and USPS became overwhelmed during the pandemic, help was found in smaller, last-mile delivery services. However, this also came with a crop of new issues.
Last-mile courier companies have faced numerous issues ranging from high turnover rates, legal issues with misclassification of employees, insurance-related issues, and even theft and loss.
For example, ridesharing apps like Uber popularized the concept of independent contractors utilizing their own vehicles for taxi services. However, when applied to courier services, legal arguments surrounding the classification of ’employees’ vs ‘independent contractors’ came into play.
These gig-based courier services are also subject to higher rates of parcel theft from employees themselves. While companies like Amazon and FedEx have taken security measures to alleviate package theft, reports of packages being stolen by independent couriers continue to emerge.
How Delivery Partners like Dropoff Mitigate Delivery Issues
In response to the issues mentioned above, many companies have partnered with professional, on-demand courier services like Dropoff to address many of the security and logistical issues facing courier services.
Dropoff’s main focus is to provide same-day delivery services for businesses, and offer a variety of last-mile delivery options for large companies looking for on-demand courier delivery.
What sets them apart from gig-based courier companies that readily accept nearly any independent contractor with a personal vehicle is a more rigorous hiring process and better benefits for drivers. Dropoff performs background checks, provides a fleet of vehicles, and shares a percentage of delivery costs with its drivers.
That last part is especially important in reducing package theft committed by independent drivers. When courier companies only pay a minimum wage to independent contractors, and expect their wages to be compensated in the form of customer tips, it leads to situations where drivers are more willing to steal expensive packages than to work for low pay.
By offering drivers a percentage of per-item delivery costs, this incentivizes drivers to not only reliably deliver more packages, but makes sure they earn a fair wage while doing so.
Why Competition is Important in the Courier Industry
When locations are serviced by only one or two large courier companies, especially in metro areas, the quality of on-demand delivery services is greatly reduced. This has much in common with the problems of monopolization, where companies are either too overwhelmed to meet demand, or have no incentive to invest in improving their service.
These situations result in stagnant customer service, and delayed delivery of critical goods to customers and retailers. It’s important for high-traffic locations to have multiple courier companies serving the area to ensure customer service is consistent, and the delivery times are as short as possible.
However, courier companies also need to ensure that they are remaining competitive by providing quality service to their customers. Competition means that courier companies must ensure their service is competitively priced, and their employees are trained to provide a consistent level of service.