To keep up with rising demand, e-commerce platforms and merchants have relied on delivery service partners (DSPs) to provide a dependable last-mile delivery experience.
Now, founders and executives with experience from FedEx, Walmart, XPO, Amazon, Instacart and the U.S. military have come together to form the FRONTdoor Collective (FDC), a network of franchised DSPs.
With more than 100 franchisees with experience in delivering for companies like Amazon (NASDAQ:AMZN), XPO (NYSE:XPO), Axlehire and Ontrac, the company, launched on Thursday, aims to expand that to 300 franchisees by the end of this year.
In an interview with FreightWaves, Chief Strategy Officer Penny Register-Shaw, who has decades of logistics experience at FedEx (NYSE:FDX), Walmart (NYSE:WMT) and Amazon, and Chief Development Officer Kelly Pickering, with experience running an Amazon DSP, discuss the importance of creating a network of DSPs. They explain how the franchise model will work and the importance of partnering with the electric vehicle manufacturer Canoo (NASDAQ:GOEV) to have 10,000 electric vehicles by 2024.
This question-and-answer interview was edited for clarity and length.
FREIGHTWAVES: Many merchant platforms have created DSP programs in-house. What differentiates the FDC from those programs?
REGISTER-SHAW: “There are two layers of benefits to our ecosystem. One is we’re working with small [carrier] businesses that do not have the resources to develop technology, sales or marketing effectively to scale their business. They also do not have the experience to make contracts for electric vehicle partnerships. With our franchise model, they will now have access to these tools so they can concentrate on their area of expertise, which is delivery.
“In this model, they have more time to take care of their drivers with better wages and benefits, training, and career progression. Now the person that comes to your front door is a professional who is happy, treated well and has a stake in the success of the company.”
PICKERING: “We recognized very early on that there was a massive gap in the industry when it came to last-mile delivery networks. It is very fragmented. There are regional players that operate in a few states, small independent fleets and even gig economy drivers delivering packages out of their personal vehicles.
“When you look at the gig economy driver, it can be a fairly inconsistent experience for the retailer and the consumer. On the other end of the spectrum, the national carrier partners are hitting their max capacity.
“We all happen to know each other; wouldn’t it be great if we got together and organized ourselves to be able to fill this need for last-mile delivery services.
“The FDC is also very focused on equity and inclusion. We are extremely proud that 54% of our network is woman-, minority-, and veteran-owned. We feel that’s another way we are changing the world and setting a gold standard to ensure everyone has a voice.
“Also, FDC partners have the option for equity in the Collective as part of their ongoing commitment to the program. We know of no other franchise arrangement like this. It’s one of the many ways the FDC is setting the gold standard for true partnership and collaboration in last-mile logistics.”
FREIGHTWAVES: How will this franchise model operate? What can carrier partners expect from the franchiser, and what does the collective expect from the franchisee?
REGISTER-SHAW: “Carriers will get franchise documentation, which would describe each party’s obligations. There will be three parties (the carrier partners, the shippers and the FDC) that have to agree on the terms and any changes to those terms. In order to make changes like your schedule, your territory or your hours of operation, there need to be very clear reasons why that needs to happen.
“Each of these franchisees will have their own operating authority, and we will have copies of those things to check for compliance and insurance requirements. … We want to make sure that the franchisees are solid citizens coming to the consumer’s doorsteps.”
PICKERING: “Our carrier partners are a critical component to our network. They’re the heartbeat, making sure that the customers and consumers are having this fantastic delivery experience. We will put a lot of emphasis on communicating and collaborating with them because we want to know what works and what doesn’t work. We can always improve the processes and procedures of shippers, and who better to help us with that than the partners who have boots on the ground.”
FREIGHTWAVES: What does the relationship between the FDC and the shippers look like?
REGISTER-SHAW: “Let’s say [a merchant] wants a white-labeled license plate, their branding on the side of the vehicle and wants the carrier to use their technology; we are able to do that. If [the merchant] wants the FDC branding on the vans and they want the drivers to wear our uniforms, we can do that as well.
“If they want us to pick up at their dock, at their warehouse or at their store, we can support and provide that omnichannel strategy. We can also operate box trucks for restocking and help with reverse logistics strategies.
“We are even working with our partners to solve porch piracy issues and reduce loss.
“Merchants care about their brand. They care about what the public sees and how drivers are treated. This franchise model allows us to have operational control over the overall customer experience at delivery without having the looming fear over their head that you’re suddenly going to be declared a joint employer.”
PICKERING: “Our goal is to create a consistent experience for their customers. The delivery experience they receive in Los Angeles is going to be the same experience that they receive in Omaha, Nebraska.
“The FDC will implement their service-level agreement with all the franchisees to make sure that we maintain the highest level of delivery.”
FREIGHTWAVES: Why was it important for the FDC to begin partnering with the electric vehicle manufacturer Canoo?
PICKERING: “It is one of our core values to be good stewards to the community, and that means creating a sustainable living for our franchisees and creating green solutions to revolutionize last-mile delivery.
“There is a clear directive from nations, governments and scientists that we really need to start paying attention and make some changes. Rather than kick the can down the road and leave it to the next generation, the FDC is taking a very proactive stance on protecting the environment.
“We have a responsibility to this planet, and inherently, putting a massive number of traditional vehicles on the road can do harm. We want to be problem solvers.
“I spoke with a number of electric vehicle partners, and one thing that particularly impressed me with Canoo is their willingness to come alongside us to partner with our drivers and solicit their feedback to give them a good experience. They are sitting in those vehicles all day and ergonomics become key. Everyone from their president to their engineers met with us and listened to what would be beneficial for last-mile delivery.”