Lessons in fraud from the frontlines of last-mile delivery
With the meteoric rise of e-commerce during the pandemic, how are companies dealing with delivery theft?
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The Problem
Every day 1.7 million packages–an estimated $25 million worth–go missing in the United States. 36% of Americans have suffered from package theft and 90% of package thieves are never caught.
In a recent survey by US Foods, 28% of deliverers admitted having taken food from customers’ orders. Delivery theft often happens before your package reaches your door.
Today
Delivery companies and carriers:
Amazon offers Hub Lockers and Hub Counters (usually convenience stores and pharmacies) as safe places to store their Amazon packages. GoLocker, Luxer One, PackagePad, and Parcel Pending offer similar services. UPS, FedEx, and USPS offer similar services
Amazon also offers Amazon Key to enable delivery to customers’ garages, homes and cars. UPS provides a similar Latch service partnering with smart lock startup Latch.
Conduct screening processes before onboarding contract deliverers, such as criminal background checks. Some companies claim to periodically re-run checks.
Request deliverers to take a photo of exactly where the package was placed as proof of it being delivered. But there is a loophole to exploit.
Fire couriers who eat or steal orders.
Offer refunds, credits, promo codes and redelivery after receiving customer complaints and (maybe) investigating the issue. Credits, promo codes and redelivery only apply within the same platform.
Customers install their own surveillance camera systems, or purchase smart locks with package security boxes.
Customers use “Ship to Store” or pick-up service at nearby post offices or their work.
Property management companies and consumers install digital surveillance infrastructure, place security signs, and, for larger buildings, integrate access solutions like ButterflyMX.
Merchants use tamper-evident labels or sealed bags for take-out food to protect order contents in transit.
Insurance companies offer insurance plans to cover stolen packages (mostly high-value items).
Opportunities
Battling thieves alone might be difficult, but what if the whole community is on guard? Pickups, currently only available in New York connects online shoppers to a network of residents that get rewarded for receiving packages.
Remove the courier entirely. Use drones for lightweight deliveries and underground tubes for heavier deliveries. Boring Company for small and mid-sized deliveries.
Packages delivered when customers are not around are more prone to theft. Doorman attempted to address the issue by receiving packages on customers’ behalf and providing narrow-window daily deliveries until midnight.
Use Near Field Communication locks on standardized delivery bags (hot bags or cool bags) to lock and unlock when it senses the customer is nearby for food delivery.
Standardize delivery vessels for meals like dabbas in India. Add in a little bit of technology to counter gaps in density in other cities and enhance security.
Time deliveries down to the minute – deliver to a convenient pickup location that the customer can go to, likely in their own home, and meet the courier flexibly.
Optimize drone deliveries to land on adjacent building rooftops until the customer is prepared to receive a package.
Monitor couriers while improving their efficiency by integrating directions and recording into standard-issue AR glasses, likely to be announced by Apple before the end of 2021.
Stakeholders
Participants
Customers
Property management companies
Couriers
Delivery companies
Mail carriers
Merchants, restaurants
Device manufacturers(e.g. smart lock, package security box, video doorbells, etc.)
Banks & Credit card companies
Insurance companies
Spenders
Spenders are stakeholders that may be likely to commit funding towards reversing this trend.
Customers
Property management companies
Delivery companies (Packages: Amazon, Instacart, etc; Food: UberEats, DoorDash, Grubhub, Postmates, etc.)
Mail carriers (UPS, FEDEX, DHL, USPS, etc.)
Manufacturers of devices to enhance delivery security (Ring, Camcloud, Boxlock, ADT etc.)
Sticklers
Sticklers are stakeholders that regulate the industries affected by this trend. In some cases, regulators may be the cause of a trend.
Local law enforcement
United States Postal Inspection Service (USPS mail and package)
Office of Inspector General (USPS internal crimes and fraud)
Predictions
Delivery theft will increase, at least in the near future. The boom of e-commerce sales in the US brings more packages to customers’ doorsteps, providing opportunities for delivery theft by non-couriers.
The huge increase in e-commerce demand comes with more demand for secure and reliable deliveries. When social-distancing measures start to ease, residents will demand the same level of delivery quality and consistency when they are no longer always at home.
Consolidation will continue in the delivery market. Delivery companies will continue to expand and increase fulfillment capacity, or else they will risk losing-out on market share.
Customers will gravitate towards food delivery companies and carriers that consistently deliver reliably and affordably. Even one bad experience can persuade a customer to switch to a different delivery service.
Horizons
Trends within and outside of the industry that are converging.
The reason why delivery drivers steal food may vary, but one reason may be a lack of economic security and social benefits. Under AB5, deliverers will be given employee benefits. Voters in California will decide on a ballot initiative backed by Uber, Lyft, DoorDash and Instacart whether food delivery companies can be exempted from Assembly Bill 5 (AB5) and continue to classify app-based drivers as independent contractors instead of employees on November 3, 2020 through Proposition 22.
Drive-thru services may find a resurgence as people continue to social distance themselves. Some businesses have gotten quite creative with this model.
Drive-thru dining eliminates food theft and adheres to social distancing, but still has pain points like longer waiting times and wrong orders. McDonald acquired AI company Dynamic Yield and voice-automation startup Apprente to provide faster, simpler, and more accurate and personalized order taking.
Opinion and Analysis
Delivery companies usually take the heat for thefts committed from their own drivers. On one hand, companies need superior service to grow market share; on the other hand, it’s hard to discipline drivers with little evidence. Delivery is ultra competitive right now, and companies are gunning to expand their fulfillment capacity. Vigorous screening and training slows their ability to bring on more couriers.
Most delivery people are just contractors—this is exactly the excuse used by delivery companies to save their reputation when internal theft is caught on the spot by security cameras—and there isn’t much delivery companies can do.
Gig workers like delivery app drivers help boost employment rate, but many of them struggle around the poverty line or even fall below it. In a recent survey by US Foods, 60% of food delivery drivers complain about low or no tips and some delivery companies make tipping disbursement opaque.
Delivery businesses will find it more difficult to combat theft committed by their own workers as they scale up.
Industry Knowledge
Additional Links
Dive deeper into the analysis with sources used to research this topic.
How to prevent ‘porch pirates’ from stealing packages from your door, according to police. (CNBC)
How much to tip your delivery driver during coronavirus. (CNET)
Amazon wants a key to your house. I did it. I regretted it. (The Washington Post)
A California judge ruled Uber and Lyft must classify drivers as employees. What does that mean for DoorDash and Instacart? (The Counter)
McKinsey’s thorough report on Parcel Delivery, although from 2016, has some great points on last-mile innovations even if it does miss how quickly e-commerce would grow due to the pandemic.