Would-be founders of a delivery business can apply to be part of the Amazon program, and if accepted, they’ll receive a host of services from the e-commerce giant including driver training, equipment and fuel discounts and “consistent” jobs delivering Amazon packages.
Amazon is looking for ways to keep up with the growing demand for package deliveries. So the e-commerce giant is beginning a campaign to encourage the startup of small delivery companies by offering big incentives — including deep discounts on branded trucks and uniforms.
Amazon announced the new program Wednesday, showing off a blue Amazon-branded delivery van that approved companies will be able to lease at discounted rates through deals Amazon has negotiated.
While the new program appears to take more business away from the big three delivery services Amazon currently uses — FedEx, UPS and the U.S. Postal Service — Amazon executives insist that’s not their intent.
Dave Clark, Amazon’s vice president of worldwide operations, said the initiative is about planning for a future of rapid e-commerce growth.
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“Meeting our capacity needs five years, 10 years, 15, 20 years out in the future is going to require lots of incremental capacity for delivery,” Clark said.
The move is the latest step by the Seattle-based giant to control more of the delivery logistics from distribution center to customer.
Amazon already has a leased fleet of planes and is testing drone delivery. Some industry observers also have speculated that the company is testing its own delivery service to pick up packages from third-party sellers, who now sell more than half the items bought on Amazon.com and deliver them to customers.
According to Wednesday’s announcement, the new project involves delivery companies picking up packages from one of Amazon’s more than 75 delivery centers across the U.S. and taking the packages the “last mile” to shoppers’ homes.
The program, which Amazon has been testing with small businesses during the first half of this year, officially launches Thursday. Would-be founders of a delivery business can apply to be part of the program, and if accepted they’ll receive a host of services from Amazon, including training for drivers, discounts — on equipment, insurance services, and fuel — and “consistent” jobs delivering Amazon packages.
It’s meant to take some of the risk out of starting a business, Clark said, adding that businesses could begin with as little as $10,000 in expenditures.
Amazon will also allocate up to $1 million for delivery businesses led by military veterans, in the form of $10,000 grants to each chosen business.
Amazon’s plan is to start each company in the program with just five delivery trucks while employees train, and increase the company’s fleet to no more than 40 trucks and 100 employees.
Amazon did not disclose the specific financial details, including the rates that delivery companies would be paid.
The Seattle e-commerce company will impose a few requirements on the small businesses that are part of the program. They must offer paid time off and health-care plans to employees. The delivery companies can have customers besides Amazon, but can only use the Amazon-branded trucks and uniforms for Amazon jobs.
The company already works with small and midsize delivery businesses for package deliveries, but the demand keeps rising.
The company’s shipping costs hit $6.1 billion during the first quarter of the year compared with $4.4 billion a year earlier, as people buy more through its website and its two-day free shipping Prime membership program grows.
This new program “is all about supplementing our network, all about building capacity and in order to do this, in order to make this possible we had to find a way to make it easier for entrepreneurs to share in this growth that we’re experiencing,” Clark said.
The program is designed to train entrepreneurs to start delivery businesses even if they don’t have experience in the logistics industry. That was the case for Olaoluwa Abimbola, founder of En Route Logistics in Denver, who has been testing the Amazon program for five months.
Abimbola was a computer scientist but grew tired of the tech field and wanted to run his own company. He now has 40 employees.
“We don’t have to make sales pitches every day … there’s constant work,” he said Wednesday.