Porch piracy is a $20 billion a year problem. AI provides a solution

Porch piracy—the theft of packages delivered when the consumer isn’t home—is a $20 billion annual problem that last year included the disappearance of some 260 million packages, according to a CNBC report.

As the retail economy heads into the holiday shopping season, merchants and law-enforcement officials are bracing for a surge as we prepare to ship almost 3.5 billion packages across the U.S. alone.

The problem is straining retail and local law-enforcement resources, and for the hard-working delivery drivers on the frontline, it often leads to false accusations that permanently impact employment records—even though most drivers are required to share a picture of every delivery with the buyer over countless apps.

Researchers at Data & Society conducted interviews with drivers from Amazon Flex, Uber Eats, Instacart, Shipt, and DoorDash. The study, reported in Fast Company, found drivers are frequently blamed for package theft, and even unsubstantiated allegations are captured in a national database that future employers have access to. That’s not fair.

The porch pirates are the problem, and they’re highly organized. At least 12 states have proposed or passed legislation making package theft a felony offense with particularly aggressive punishments in Texas, Michigan, Utah, Oklahoma, and Pennsylvania. So far, those measures have shown no sign of slowing the pirates, with consumers and retailers shouldering the growing losses. And meantime, the work-around solutions meant to protect consumers contradict the frictionless ease that is the whole premise of online shopping with free two-day delivery.

In New York City, where as many as 90,000 packages are stolen every day, the Department of Transportation has launched a pilot program, LockerNYC, in which consumers can collect their online purchases at various storefront or sidewalk locations. Amazon Locker has 900 locations across the U.S. and recently launched Amazon Key, allowing consumers to throw privacy to the wind and give delivery persons access to their homes and cars. Amazon also has pick up kiosks at Whole Foods and Kohl’s and The U.S. Postal Service has set up after-hours pick-up locations in many states. All of that said, for consumers who simply wanted convenient, free two-day shipping, the time spent driving and waiting in line for a package doesn’t seem like the best fix, nor a differentiated digital experience.

AI to the rescue

None of these efforts are helping and, in fact, they’ve created a complicated, expensive side show that doesn’t solve the consumer problem and hurts hourly workers. This year, the fastest path to progress is simply reinventing shipping protection for the digital era and AI can do that at scale, for pennies on the dollar.

As Black Friday and Cyber Monday loom, many retailers have adopted shipping protection to resolve what used to be a six-week claim process, in a matter of minutes. My company, Extend, for example, leverages AI to process 98% of shipping claims in 90 seconds, with a replacement product shipped to the customer the same day.

This year a range of market leading retailers have already adopted AI-powered shipping protection across the home goods, apparel, fitness, and luxury categories. The new approach is a type of no-fault insurance, which the consumer purchases at checkout for around 2% of the purchase price. For a $200 pair of shoes, the cost to protect against shipping issues would be just $4. No sign on delivery, no back and forth over email and phone with support teams, just a simple and seamless two-click experience.

Consumer anxiety and concern about porch piracy are also driving shoppers back to marketplace platforms like Amazon and Walmart who have built in logistics infrastructure. This limits consumer choice and hurts merchants that don’t have the same scale. This is evidenced by a higher rate of purchase conversion for retailers that offer shipping protection.

Unless online shoppers decide to never leave home, porch piracy is a crime that seems to defy easy solutions. However, AI-powered shipping protection offers one way to protect consumers and retailers alike to ensure the simplicity and efficiency that e-commerce is all about.

And let’s not forget about our drivers, they are gearing up to deliver over 3 billion packages for the holidays. They have enough of a load on their shoulders. Let’s not make porch piracy a problem they have to deal with as well. Instead, let’s give them a big thank you.

Rohan Shah is the cofounder and chief revenue officer of Extend, a leading venture-backed technology company.

https://www.fastcompany.com/90987036/porch-piracy-ai-solution?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss