Start-ups that want to transform logistics - Glovo by Alba Castanyer

Start-ups that want to transform logistics - Glovo

E-commerce has transformed the delivery sector. Customers have higher expectations about the delivery service. This supposes high logistic challenges for these companies, specially in the last mile. These are the four most important ones:

• Cost: 28% of total delivery cost comes from the last mile. It is one of the biggest challenges in e-commerce. Some business that cannot handle the costs, end up passing them to the customers. Some of the problems related with high delivery costs lead to poor transport structure or lack of warehouse readiness.
• Transparency: customers want to know where their product is. Increasing need to create tracking codes to have information about the delivery location of the delivery.
• Efficiency: customers expect faster deliveries. One way to face this challenge is using technology that allows the company to dispatch automatically to the right person, in the right area and at the right time. This can increase efficiency and save delivery time. Moreover, the growing number of vehicles in cities and the use of this type of transportation to fulfil demand of goods can lead to traffic congestion. One solution to this problem is using a sharing economy mechanism that consists in sharing trucks between different companies to have the most efficient weight and volume capacity.
• Friction: a friction that may appear is the way in which the customer wants to product to be delivered: deliver it between 10:00 and 12:00, don’t ring the bell… To avoid frictions, communication between the customer and the delivery person is needed.

Rethinking Last Mile Delivery – An Example

One example of a start-up that wants to change logistics and has a different view of e-commerce is Glovo.

Glovo is a start-up which started operating in 2015 in Barcelona. It is an example about an efficient home delivery transportation system. Currently, it operates in Spain, France and Italy.

It is considered to be an on-demand economy, this means that it realizes an economic activity that fulfils consumer demand via the immediate provisioning of goods and services.

Through an app for smartphones, customers can order whatever they need and the service is done in less than one hour.

Some examples of orders you can make are going to the pharmacy to buy a medicine, order food, pick up clothes from a launderette, go grocery shopping, buy flowers…

The transportation service is carried out by independent couriers, which are called ‘Glovers’.  Glovers are freelance workers who have free time, a transportation method and a smartphone. They can choose the schedule they want to work in with total freedom.

Once a customer places an order, he can check in real time who is going to deliver the order, the location and the route this person will follow. Customers can also chat with the glovers in case of doubt about some aspect of the delivery.

Glovers usually use motorbikes and bicycles, however they can also use car, metro or go walking.

The key of Glovo delivery is the immediacy. An average order takes 30 minutes to be delivered. It wants to break with the traditional logistic system of courier companies where all orders are first transported to a logistic center and then with trucks and vans they are sent to the final location. Glovo wants to transport a package from point A to point B without the need of having a warehouse with products. The glover first buys the product and then it is delivered within a very short period of time.

Glovo can also be considered an example of collaborative economy. Glovers can decide if they want to work, for how long and which orders they want to accept. Although this gives flexibility to the workers, it has also some drawbacks: they don’t have a fixed salary nor job security.

Alba Castanyer