Tuesday, March 24, 2015

Roadie May Be Another Beneficial "Sharing Economy" Service

It is interesting to think about the historical evolution of mail service in the United States. For many decades, people had no choice but to mail packages through the United States Postal Service (USPS). But the government-operated service proved to be sufficiently lethargic and inefficient that new entrants into the package delivery market were able to emerge and thrive. United Parcel Service (UPS) and FedEx provided consumers with alternatives that stressed faster delivery options, more accountability, and more transparency, especially as online tracking emerged.
But still, it can be time consuming to go to the local USPS, UPS, or FedEx office to deliver a package, so wouldn’t it be convenient if there was an additional option that incorporated picking packages up and other features? Well, there is.

Roadie, which describes itself as “the first neighbor-to-neighbor shipping network,” is the Airbnb and Uber version of mail service. In other words, like Airbnb and Uber, Roadie is another manifestation of the new “sharing economy” business models that are providing new options for consumers. These new services not only provide service options for consumers, but they also provide new sources of revenue for those “Roadies” carrying the cargo.
At the touch of a smartphone, with this new online application, users can find Roadie drivers who will pick up packages and deliver them to the desired destination. On its website, Roadie says: “Today 250 million passenger vehicles will hit the road with more than a billion square fit of unused cargo space. At Roadie, we wonder what would happen if we put just a fraction of that wasted capacity to good use.”
While the new service may seem feasible for only small trips, as opposed to cross-country shipping, you will be surprised. Check out Roadie’s footprint below just three weeks after its launch in November 2014.
Additionally, Waffle House recently partnered with Roadie to offer free waffles and coffee to Roadie drivers, according to a TechCrunch article. Because Waffle House restaurants are primarily located along interstate highways, this may incentivize additional productivity from the drivers. For example, a driver may be willing to work earlier hours or deliver a package to a faraway location if he or she knows coffee and a waffle are waiting for them along the way.
The addition of a new competitor in the delivery service market generally means consumers will enjoy the benefits of lower prices and higher quality service. Whether the new “sharing economy” competitor happens to be competing with the government (the USPS) or with legacy private sector businesses (FedEx or UPS), such new competition benefits consumers through lower prices and/or improved service offerings.
For example, with UPS and FedEx, consumers can track their packages through a series of checkpoints. This feature is certainly useful to many consumers and was an advance at the time it was introduced. But with Roadie, consumers can track their packages every second of the trip through GPS. There is also more accountability and transparency about issues such as damaged packages, driver backgrounds, and shipping costs because the information is accessible through Roadie’s application and website.
As my colleague, Michael Horney, and I wrote in a Perspectives from FSF Scholars entitled “The Sharing Economy: A Positive Shared Vision for the Future:”
Instead of worrying about the worst possible outcomes that could happen from using the applications of these new emerging business models, public policymakers should focus tightly on addressing any real-world problems in the least intrusive, least costly way. If the focus of public policymakers is on the worst possible outcomes, entrepreneurs and consumers will be too afraid to try new things. Innovation will be stifled.
A positive shared vision for emerging technologies in the rising sharing economy requires a market-oriented perspective. This will foster the greatest amount of consumer welfare and consumer satisfaction among willing buyers and sellers.
This is applicable to the mail service market and the new Roadie application. If drivers do not perform adequately or if they engage in unsafe activity, consumers can opt for more traditional mailing services, such as UPS or FedEx. Similarly, any economic inefficiencies that exist in Roadie’s service likely will create an opportunity for other companies to emerge within the new “sharing economy” to offer similar delivery services.
With each day, the new “sharing economy” business models are providing more innovative choices to consumers in ordinary markets that have existed for many decades, whether with respect to Airbnb in the lodging market or Uber in the local transportation market.

It is exciting to see new online alternatives emerge in a number of markets as the “sharing economy” continues to grow. Ultimately, this benefits consumers who avail themselves of the services, those who provide the services, and the economy as a whole.