Amazon Wants to Foster Small Independent Delivery Fleets

Amazon on Wednesday said it would offer incentives to entice entrepreneurs to set up their own small package-delivery businesses as part of Amazon's latest effort to solve the challenge of getting goods the last mile to customer doorsteps.

At a press event in Seattle, Amazon unveiled one of the dark grey Prime-logoed vans that it wants to lease to delivery businesses on what it says are attractive terms. It also said it would provide uniforms, fueling plans and insurance programs for fleet operators and even offer classes on tax, payroll and other small-business challenges.

The new program promises more competition for delivery companies like United Parcel Service and FedEx Corp.

Amazon says qualified entrepreneurs could start businesses with as little as $10,000 (roughly Rs. 6.9 lakhs), although that does not include the cost of hiring drivers. "A 40-vehicle fleet could earn as much as $300,000 (roughly Rs. 2 crores) a year in profits," said Dave Clark, Amazon's senior vice president of worldwide operations.

Clark said he would expect to see operators with 20 to 40 vans employ 100 drivers. Amazon did not offer any details on the incentives or say whether it would pay per delivery, per mile driven or per month.

The branded vans can only be used for Amazon deliveries, an Amazon spokeswoman said. Last-mile delivery is among the retail industry's biggest challenges as customers increasingly expect quick and cheap delivery of almost anything ordered online.

Amazon rivals like US grocery chain Kroger Co and retail giant Walmart are also experimenting with different delivery models.

Earlier this year, Reuters reported that Walmart had ended grocery delivery partnerships with ride-hailing services Uber and Lyft. Walmart has also offered to pay its store employees to complete deliveries on their way home from work. Walmart is now doing grocery delivery with DoorDash and Postmates.

Meanwhile, Amazon has for nearly three years had its Flex program where drivers can get paid for deliveries using their personal cars. That program will continue, Clark said, but only solves part of the problem.

"Flex is all about leveraging available capacity," said Clark. Salting the landscape with new delivery operators offers scale.

"We looked at our history with small business" on the Amazon marketplace platform, Clark said, "and we said we can do the same thing in last mile and people can own a manageable size business."

© Thomson Reuters 2018