IOU.io industry focus 4 of 4: On-demand services, part one
By Edward W. Mandel
This is the last in a series of posts on how blockchain will improve ecommerce in specific industries. We previously looked at gaming, travel and fashion, and now delve into on-demand services — that is, logistics.
The last mile. It’s a technical term in the logistics industry. And it’s been a scam forever.
It essentially means the final leg of a delivery or telecom network. It’s that part at the end where a package gets from distribution center to your front door, or the signal gets from the utility pole to the cables running through your walls. The IOU.io team is keenly aware that this industry, which is rife with inefficiencies, is not only a use case in itself, but solving its issues would improve results for merchants across all ecommerce verticals. So none of us dare ignore it.
Legacy issues
The last mile is also the highest-priced mile.
The issue isn’t getting the merchandise from port to port. That’s fairly cheap and, if not easy, at least well-rehearsed. The current blockchain alliance between Maersk and IBM could soon make it even more efficient.
The trick, though, is to get it to from the port to the buyer’s front door. When people were in the habit of going to the store to shop for and pick up their stuff, it wasn’t so much of a concern. But now, with everything from major appliances to earbuds coming from online orders and 1.7 billion people worldwide buying goods online, the seams have begun to tear on home delivery.
First, and most obviously, stuff gets stolen off of front stoops all the time. And sometimes the larceny doesn’t stop there, because there’s no clearer sign a family is away on vacation than an Amazon box sitting under the mail slot for two days straight.
Let’s also remember that delivery drivers are really paid for the time they’re out of the truck, not for the time they’re in the truck. While they’re carting a box up a front walkway, that’s the time when identity thieves can help themselves to delivery slips with names, addresses and phone numbers all conveniently co-located with payment information. Of course, all major courier services keep portions of those fields masked, but let’s remember two things: 1) A lot of these national or global services subcontract out to local drivers who might be a little more lax in the infosec department, and 2) there’s no substitute for the cryptography inherent in blockchain technology when it comes to data privacy.
Another issue with last-mile logistics is cost efficiency. I maintain my position that delivery charges far exceed their costs, but the cost is real. And it could benefit from real improvement, which blockchain could facilitate.
“Blockchain reduces the costs of logistics, as it simplifies certain trade processes and paperwork. By using smart contracts, approvals and customs clearance can be quicker and more efficient, reducing processing times for goods at customs checkpoints,” writes Lazada Group’s Edwin Kheng in a LinkedIn article. “The coordination of documents on a shared distributed ledger also makes physical paperwork largely unnecessary and thus environmentally friendly. At the same time, the E-commerce industry is seeing rising demand for same-day and time definite delivery services. Using traditional systems to scale up is inefficient and will result in cost increases for many companies. “
Our first clue
That last-mile charges are completely out of proportion to anything reasonable isn’t a new development. People who remember the days before the Web will remember those scammy, late-night TV ads that offered a miracle product that would change your life if you’d “order before midnight tonight!” The price for this thing that would make your life so much easier and make your family so much more appreciative was always $9.99 or $19.99 or $29.99 …
“… plus shipping and handling.”
Shipping and handling was always bogus. It could add another 50% or more to the total price but you were already reeled in by the low sticker price.
This was always a cynical exercise. Warehouse space has always been pretty cheap, and these tchotchkes were always sent regular mail. Shipping and handling charges were nothing other than the difference between the price that would induce an impulse buy and the amount of money with which the typical fool would be easily parted.
Everyone in the direct marketing business knew this. What changed when the internet completed its own last-mile journey into the average home was that, suddenly, everyone in the world was now in direct marketing.
eBay changed the game. Suddenly, everybody could sell stuff on the Web. They could post in all on a virtual auction block, provide an opening acceptable bid and even provide a price at which a purchaser could “Buy It Now”.
And, of course, you could set your own shipping costs. Sure, there were guides and calculators to help newbies determine how much expense would actually be incurred depending where the buyer lived and how soon they needed it. But that was entirely too much like math class and people just made up a number that sounded right.
eBay allowed you to sort your search by price, lowest to highest. It wasn’t long, though, before buyers — who were quite often also sellers — figured out that ranking the sticker price that way wasn’t indicative of the order of total price. So eBay had to get ahead of the issue and enable buyers to sort searches by price including shipping. For a long time it still offered nominal price as a sorting option, but it doesn’t anymore. Apparently, there is a finite number of suckers and eBay managed to reach it.
But now we’ve reached the tipping point where everyone knows that delivery costs are way too high, and that’s because the they’re tethered to what the market will bear, not how much expense it actually adds.
If ever an element of the supply chain were ripe for disruption, it’s moving packages that final step to the consumer’s door.
The truck stops here
Fortunately, distributed ledger technology has arrived to enable that disruption. IOU.io applauds those startups that are, as we speak, taking the first hammers to the ossifying relics of the order-before-midnight-tonight age of delivery services.
ShipChain, based in the U.S., offers blockchain solutions to improve tracking and inter-carrier communication, reducing “porch pirate” theft and reduce the reliance on — and thus expense of — middlemen. This is the same ShipChain that in May got dinged by regulators in North Carolina because its SHIP tokens looked too much like securities for some crusader types. The resulting cease-and-desist order was quickly but less publicly vacated, Ethereum World News reports.
I’m really rooting for ShipChain for another reason, and that has more to do with seeing substance succeed over speculation. In another blog that I write here on Medium, I note how perfectly good utility tokens see a price spike as soon as they’re listed on top-ten exchanges, only to give back all those gains and then some once the day traders are done with them. It’s called the “When Binance?” effect. I hope and fully expect the SHIP tokens to be used for their intended purpose and be fairly valued by the market in support of that purpose. If blockchain is really going to improve liquidity for other assets — including those that are distributed through logistic channels — then we need to improve liquidity for our own tokens. (Sorry, I’ll get off my soapbox now.)
Elliptical thoughts
Honorable mention to Singapore-based FreshTurf, an open-source project on the Hyperledger chain that might be best positioned to provide distributed ledger solutions to legacy logistics companies.
But before signing off, I should also note aspects of on-demand services I hadn’t mentioned yet. First, there’s delivery of that most precious cargo: people. Uber, Lyft and their ilk are just as ripe for disruption as anything delivering goods.
Also, there are a full array of hyperlocal services, for which the last mile is the only mile that matters. This isn’t just groceries from the supermarket in that just-too-far-to-walk zone away from your house. It’s also personal care and home repair help, as well as other neighborhood artisans whose help you’ll need on an occasional or ongoing basis.
And we can’t forget about professional services. The entire gig economy is predicated on removing friction between the fractional employer and the fractional employee. Blockchain is, of course, ripe with possibilities there.
But this turned into way too much for a single post. So we’ll take a look at the rest of the on-demand industry in our next post.
Edward W. Mandel is a strategic advisor for IOU.io , he is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.io P2P Hedge Exchange helping traders connect with each other to leverage their crypto assets.
IOU is a blockchain-based peer-to-peer platform designed to unify ecommerce transaction and customer retention processes, incorporating trade-able IOUs. It is currently raising capital through ICO. The platform can be found online at IOU.io and its community on Telegram at https://t.me/IOUCommunity.
