Amazon’s plans for its own-branded delivery service are moving ahead, as the company seeks to reduce its reliance on established delivery services like FedEx (FDX) and UPS (UPS). But Amazon wants others to take much of the risk.
On Thursday, the e-commerce giant said it wanted entrepreneurs to set up small delivery companies specifically for the purpose of delivering Amazon packages. Each fleet can have up to 40 vehicles. Workers can get Amazon-branded uniforms and delivery vehicles Amazon branding—however, those clothes and vehicles can only be used when delivering Amazon packages. Amazon will give the companies technology and training, as well as discounts on insurance and vehicle leases.
What’s more, Amazon (AMZN) said it would offer a total of $1 million for military veterans who want to start these businesses—that’s $10,000 per person. This arguably makes Thursday’s announcement something of a political move as well as an operations move, coming at a time when the company faces criticism from President Donald Trump over its supposed exploitation of the Postal Service.
“The offering provides technology and operational support to individuals with little to no logistics experience the opportunity to run their own delivery business,” Amazon said in a statement. “To help keep startup costs as low as $10,000, entrepreneurs will also have access to a variety of exclusively negotiated discounts on important resources they’ll need to operate a delivery business.”
Amazon’s worldwide operations VP, Dave Clark, said in the statement that Amazon needed more capacity due to customer demand. At the same time, he praised Amazon’s “great partners in our traditional carriers”—services that clearly can’t fully handle Amazon’s load.
According to figures quoted by the Wall Street Journal, Amazon’s package shipments in the U.S. Have more than doubled in the last five years, and projected growth outstrips the delivery capacity of the legacy logistics firms.
Amazon already operates a fleet of logistics vehicles—from planes to truck trailers—to get products around the U.S. The issue here is the “last mile” of the logistics process, which sees packages delivered to customers’ doors.
The company already has a program called “Flex” for drivers who want to use their own cars to deliver on-demand packages. But now people in the U.S. Will likely get used to seeing Amazon-branded delivery vehicles on their streets, much as they do with the likes of UPS and the Postal Service.
The structure of Amazon’s plan means the company doesn’t need to bear most of the risk associated with setting up its delivery service. However, the extreme popularity of its platform means these new small businesses will probably have a guaranteed source of income, and an Amazon spokesperson told Coins2Day that “these small business owners are empowered to operate their business as they see fit”—meaning they can have other customers if they want, as long as they use non-Amazon clothing and vehicles when serving those customers.
It’s worth noting that Amazon ultimately wants to deliver packages by drone and other automated means. So it remains to be seen how long these last-mile delivery startups will have before they’re competing with robots.
This article was updated to include Amazon’s statement and to note that the entrepreneurs will in fact be able to serve customers other than Amazon, as long as they don’t use Amazon-branded uniforms and vehicles when doing so.
