Will Amazon's Delivery Service Pack a Punch?

Amazon wants you to start a business to deliver its packages

Amazon wants you to deliver its packages for them. Over time, Amazon will empower hundreds of new, small business owners to hire tens of thousands of delivery drivers across the USA, joining a robust existing community of traditional carriers, as well as small-and-medium-sized businesses that already employ thousands of drivers delivering Amazon packages. Amazon says those businesses created under the program would operate 20 to 40 vans and employ between 40 and 100 people. This issue is one of the biggest challenges for retail, as customers are increasingly expecting a faster and cheaper delivery of online sales.

The new program is slated to increase competition for existing delivery firms such as FedEx and UPS.

In this Wednesday, June 27, 2018 file photo, Parisa Sadrzadeh, a senior manager of logistics for Amazon.com, demonstrates a package delivery for journalists at a media event in Seattle to announce a new program that lets entrepreneurs around the country launch businesses that deliver Amazon packages. (He thinks the biggest threat is to growth at the U.S. Postal Service, as that's more likely to be hit by Amazon insourcing.) Vernon also thinks that while the new service could pull from UPS and FedEx "that would be dumb as the marginal rate structure on offer by the bigger companies is likely to be lower than the all-in cost of delivering through a DSP (which is also not particularly smart)".

Drivers will be full-time workers instead of contractors, and Amazon will require business owners to give them paid time off and other benefits. Amazon will take an active role in helping interested entrepreneurs start, set up and manage their own delivery business. Those incentives include discounts on Amazon-branded vehicles customized for delivery, branded uniforms, a fuel program, and comprehensive insurance coverage.

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Amazon already works with hundreds of third-party courier companies that hire and manage their own fleets of drivers, but they did not disclose to Business Insider's whether its relationship with its current delivery service providers would change.

An Amazon Prime delivery van.

The company has been building up its own fleet of 7,000 of trucks and 40 airplanes to cover the "middle mile" of delivery. Individuals can also sign up for a programme called Amazon Flex to deliver merchandise using their own vehicles, earning $18 to $25 an hour.

What do you think about Amazon's new plan? They haul goods between shipping centers and bear Amazon logos, but don't show up at customers' doorsteps.

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