Retailers today respond to the ever-increasing customer demand through alternative delivery options such as pickup at the store, curbside pickup, and home delivery. Even though home delivery, viz. the last-mile delivery, is one of the most preferred options for the majority of customers, it leads to major cost concerns for retailers due to high labor costs. To reduce retailers’ potential financial burden caused by this complexity, this study evaluates horizontal collaboration in last-mile delivery for a large retailer to facilitate low-cost delivery services. We investigate three research questions:
- How can we increase delivery density by collaboration?
- What is the role of time windows in collaboration?
- What is the impact of driver shortage in a collaboration?
We developed a digital platform as a simulation game that implements different methods for developing horizontal collaboration between diverse stakeholders, running different scenarios for gain and value sharing in collaborative last-mile delivery. The platform serves as a simulation tool for multi-dimensional collaboration in last-mile delivery operations, which enables the users to interactively test various scenarios to examine the effects of the changing number of orders and available crowdsourced drivers and time windows on the delivery cost and service level. The game allows the users to play different roles in the collaboration and negotiate with each other to explore the power of negotiation.