“I’m keenly interested in establishing myself in this program.”
“I am a disabled combat veteran and I’m interested in Amazon’s Last Mile Delivery Program.”
“This is going to be a dream come true to me.”
These are some of the many messages that dropped in my inbox this morning as readers showed early interest in Amazon’s announcement on Wednesday of its new “Delivery Service Partners” program.
In an effort to expand its delivery capacity and handle the shipping and delivery of items purchased on its site, Amazon is rolling out a way for anyone run their own package delivery fleet of up to 40 vehicles with up to 100 employees.
Amazon will work with the entrepreneurs — referred to as “Delivery Service Partners” — and pay them to deliver packages while providing discounts on vehicles, uniforms, fuel, insurance, and more. They operate their own businesses and hire their own employees, though Amazon requires them to offer healthcare, paid time off, and competitive wages. Amazon said entrepreneurs can get started with as low as $10,000 and earn up to $300,000 annually in profit. It is also offering $10,000 reimbursements for qualified military veterans.
It’s Amazon latest move to build its own alternative to (if not yet a replacement for) UPS, FedEx, the U.S. Postal Service and other traditional shipping companies and postal services. The company already has 7,000 truck trailers and 40 jumbo jets that shuttle packages to and from 125 fulfillment centers across the world. The new delivery program is meant to help Amazon address “last mile” deliveries, or those from the warehouse to a customer’s doorstep that are often the most costly part of the delivery supply chain.
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“Amazon’s new delivery program will afford the company more ‘last mile’ capability and control, and as a result, is credit positive. Proprietary control over this key ‘last mile’ is a critical missing component of Amazon’s arsenal as it competes with brick-and-mortar, and depending on how much capability this new venture generates, will serve to close this gap,” said Charlie O’Shea, a lead retail analyst with Moody’s Investors Service.
Shares of UPS and FedEx were down more than 2 percent on Thursday. However, CNBC reported that Amazon’s new program may be welcomed by the traditional delivery giants given the low-margin nature of last mile deliveries.
The announcement comes a few months after Amazon’s economic impact on the USPS was publicly questioned by President Donald Trump in a series of widely discussed tweets.
In a note to clients this past April, D.A. Davidson analyst Tom Forte wrote that Amazon is “more prepared than ever to move on from its arrangement with the USPS if it had to,” as Business Insider reported.
Amazon made a separate big announcement on Thursday with its intention to acquire online pharmacy PillPack. Don’t be surprised if workers in Amazon-branded shirts and vans soon deliver customers’ medication, in addition to Amazon.com packages.
This is a smart combo. @Pillpack doesn’t just have pharmacy licenses but also software that can handle complex orders, so Amazon can focus on scale, delivery, etc w/o having to learn pharmacy from scratch. https://t.co/9ozMiK1jV0
— Caroline Chen (@CarolineYLChen) June 28, 2018