Amazon to Help Individuals Build Their Own Delivery Companies
Amazon.com announced today the launch of a new offering designed to help individuals build their own companies that deliver Amazon packages. With the offering, Amazon will provide an active role in helping interested entrepreneurs start, set up and manage their own delivery businesses, even with little or no logistics experience. Amazon will offer the couriers — who will not be Amazon employees — access to the company’s sophisticated delivery technology, hands-on training, and discounts on a suite of assets and services, including new Amazon-branded vehicles customized for delivery, branded uniforms, fuel, insurance coverage, and more. Amazon claims that new partners can start up their business for as little as $10,000 — an amount that the company will reimburse to businesses founded by U.S. military veterans.
Amazon said that if the program is successfully implemented, owners can earn as much as $300,000 in annual profit operating a fleet of up to 40 delivery vehicles. The company's goal is to empower hundreds of new small business owners to hire tens of thousands of delivery drivers across the U.S., joining the existing community of traditional carriers, as well as small and midsized businesses that already employ thousands of drivers delivering Amazon packages. (That program, Amazon Flex, pays individuals $18 to $25 an hour to deliver Prime Now packages from their own vehicles.)
Total Retail's Take: Huge move, Amazon. Today's announcement is clearly designed to help Amazon secure enough delivery capacity to keep up with the growth of its business — and its continued preference to outsource this function rather than take on the costs of salaries, insurance and benefits that would come from employing a delivery team in-house. This announcement should raise some red flags for delivery companies such as FedEx, UPS, and the U.S. Postal Service. Can Amazon's private contractors replace some of the work currently done by these partners, not only delivering packages for its own company, but for other companies as well? After all, Amazon already has more than 100 warehouses, a fleet of trucks, and even its own airplanes. Also, earlier this year it announced plans to test a new service in which Amazon sends a truck to pick up sellers’ products, which then takes inventory either directly to an Amazon fulfillment center or to the U.S. Postal Service or to couriers like FedEx, depending on what’s most cost effective. Currently, that work is done by UPS, FedEx and other companies. Amazon, however, has repeatedly said that it's not looking to replace the big delivery companies, but rather supplement what they do.