Joint Matching and Pricing for Crowd-shipping with In-store Customers

TL;DR

This paper introduces a joint matching and pricing model for crowd-shipping using in-store customers, employing advanced neural methods to optimize delivery efficiency and costs in urban last-mile logistics.

Contribution

It develops a novel MDP framework combined with neural approximation techniques for joint order assignment and dynamic pricing in crowd-shipping, addressing real-world uncertainties.

Findings

Achieves up to 6.7% cost savings over fixed pricing policies.

Flexible delivery delays reduce costs by 8%.

Multi-destination routing cuts operational costs by 17%.

Abstract

This paper examines the use of in-store customers as delivery couriers in a centralized crowd-shipping system, targeting the growing need for efficient last-mile delivery in urban areas. We consider a brick-and-mortar retail setting where shoppers are offered compensation to deliver time-sensitive online orders. To manage this process, we propose a Markov Decision Process (MDP) model that captures key uncertainties, including the stochastic arrival of orders and crowd-shippers, and the probabilistic acceptance of delivery offers. Our solution approach integrates Neural Approximate Dynamic Programming (NeurADP) for adaptive order-to-shopper assignment with a Deep Double Q-Network (DDQN) for dynamic pricing. This joint optimization strategy enables multi-drop routing and accounts for offer acceptance uncertainty, aligning more closely with real-world operations. Experimental results demonstrate that the integrated NeurADP + DDQN policy achieves notable improvements in delivery cost efficiency, with up to 6.7\% savings over NeurADP with fixed pricing and approximately 18\% over myopic baselines. We also show that allowing flexible delivery delays and enabling multi-destination routing further reduces operational costs by 8\% and 17\%, respectively. These findings underscore the advantages of dynamic, forward-looking policies in crowd-shipping systems and offer practical guidance for urban logistics operators.