5/5 (1)

uShip

You ever needed to transport your furniture? Or wanted to ship something big? Often this can be a hassle, and finding an affordable carrier can be difficult. UShip, an electronic marketplace and auction for shipping services, makes this a lot easier. It was started ten years ago and has already connected over 3.5 million customers and 800.000 service providers with each other. They focus on decreasing inefficiencies in the logistics industry.

Through uShip, customers can post their freight and carriers can then place competing bids for the right to haul a customer’s shipment. Another option is similar, but reversed where customers can bid on available places offered by carriers. This way customers can book a shipment immediately or can wait for auction bids (Mylene, 2003). Overall, uShip is a clear example of an online electronic market that applies online auctions on its platform.

 

The logistics industry

The industry can be divided into three major business models serving both B2B and B2C segments. Well-known are the courier and parcel companies. Then there are carriers with the focus on transportation of goods (e.g. sea-freight). The third model is that of logistic service providers who arrange shipments (e.g. forwarders acting as intermediaries). The focus of the industry is especially on customer satisfaction, resulting in a highly competitive price war in many cases. Moreover, complex forecasting and planning systems are used to meet customer demands and deliver on time (Accenture, 2017).

UShip works as follows. First a customer needs to transport something. Second, the customer enters specific requirements for the transport into uShip and compares possible carriers in one overview. Third, the customer selects their preferred offer and pays. Eventually the freight is picked up and delivered.

 

Benefits

Using uShip has several benefits over traditional logistic companies. It bypasses the middlemen and can offer their customers a discounted price. There is more price transparency as well as an increased number of alternatives easily visible. Eventually, the transport quality can increase as well. Carriers are able to increase their efficiency, by using a higher percentage of the space available, as well as revenues.

The electronic brokerage effect applied by uShip is beneficial as it increases the number of alternatives easily available. Next to that it increases the quality of alternatives and decreases the costs of the product selection process (Malone, Yates & Benjamin, 1987).

 

Future technological developments

Let’s take a look into the crystal ball. What future technological developments could impact the logistics industry, and how? Several technologies are likely to have a big impact:

• Blockchain and smart contracts: this would impact how transactions are managed and enable public tracking;

• 3D printing and local production: with these technologies readily available, shipping demand could decrease drastically;
• Automation and IoT: using drones and self-driving trucks could reduce inefficiencies and would decrease the number of jobs required.
  

Today’s electronic markets and auctions, like uShip, are on the verge of disrupting the logistics industry. 

 

References:

Accenture. (2017). Digital Disruption in Freight and Logistics. Accenture. Retrieved from https://www.accenture.com/t20170630T071916Z__w__/us-en/_acnmedia/PDF%2053/Accenture-Digital-Disruption-Freight-Logistics.pdf#zoom=50

Malone, Yates, and Benjamin (1987), ”Electronic markets and electronic hierarchies”, Communications of the ACM.

Mangalindan, Mylene (2003), ”Consumers Buy Furniture, Even Refrigerators on the Internet”, Wall Street Journal. Retrieved 2009-05-08.

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Hi all,

What bidding strategies do bidders adopt in business-to-business auctions? Are they different from the strategies found in business-to-consumer auctions? And why? We have to read the article of Lu, Gupta and van Heck ‘Exploring Bidder Heterogeneity in Multichannel Sequential B2B Auctions’ for this week. I am inspired by this article and I would like to share some main aspects with you. In this blogpost I will thus give you a short summary of this important article.

Prior literature mainly focused on auctions in business-to-consumer and it’s therefore interesting that this article focuses on the business-to-business relations. The authors investigated if there are specific behavioural characteristics across different channels which could be useful for the design and implementation of multichannel auction markets (Lu, Gupta, and van Heck, 2016). Moreover, they investigated the antecedents of bidder’s strategic choices. At first they suggested that bidders with high budget constraints are more likely to choose an early bidding strategy over an opportunistic strategy. Moreover, they supposed that bidders with high budget constraints are more likely to choose a forward-looking, early bidding strategy over a conservative, early bidding strategy. They also investigated if bidders are more likely to choose an opportunistic strategy over an early bidding strategy when the bidders have large dement. The authors explicitly supposed that bidders are more likely to choose an analytical strategy over an early bidding strategy when the bidders have large demand (Lu, Gupta, and van Heck, 2016).

What are the main differences between early bidders and opportunists?

• Early bidders: are likely to be more risk averse and they would rather pay a risk premium to ensure the fulfilment of orders at the beginning of an auction.
• Early bidders: are more sensitive to the change of minimum purchase quantity. Therefore, auctioneers should think of alternative strategies other than increasing the minimum purchase quantity to speed up the market process.

• Opportunists: exhibit a certain degree of gambling behaviour: in order to acquire the product at the best price, they are willing to trade the opportunity to purchase in earlier rounds for more information about market conditions and opponents’ profiles.
• Opportunists: are often bidders with large demand who use an online bidding channel.
• Opportunists: outperform early bidders in surplus extraction.

I would like to share some interesting video with you about the dutch flower auction produced by Erik Olsen (See below)

Kind regards,

Daan Verpalen

 

Sources:
Exploring Bidder Heterogeneity in Multichannel Sequential B2B Auctions (2016), MIS Quarterly Vol. 40 No. 3, pp. 645-662
https://www.youtube.com/watch?v=zx7buFdpis4 (Olsen, 2014)

http://https://www.youtube.com/watch?v=zx7buFdpis4