Dive Brief:
- Amazon wants entrepreneurs to set up small businesses and startups to deliver Amazon packages, the e-commerce giant said in a press release early Thursday.
- Amazon will provide "technology and operational support to individuals with little to no logistics experience." The company will funnel $1 million to funding startup costs for military veterans and also offer $10,000 in reimbursement for what it deems to be "qualified candidates."
- The e-commerce company said "successful owners" can earn up to $300,000 annually with a fleet of up to 40 delivery vehicles.
Dive Insight:
Amazon has already empowered thousands of small businesses through its marketplace, and now it's looking to do the same in the logistics space. But as it's helping entrepreneurs, Amazon is also helping itself gain greater control over its own logistics network.
"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," Moody's Lead Retail Analyst Charlie O'Shea said in an e-mailed statement.
Amazon has frequently relied on established third-party logistics providers (3PLs) like UPS and FedEx to fulfill the last mile. But the e-commerce boom has strained capacity for carriers, leading to high rates and even delays during peak shipping periods, such as the holiday season.
"Customer demand is higher than ever and we have a need to build more capacity," Dave Clark, Amazon's senior vice president of worldwide operations, said in the news release.
While Clark claims Amazon has "great partners in our traditional carriers," the company will offer Amazon-branded vehicles and uniforms to entrepreneurs, appearing to be a direct hit at FedEx and UPS.
Amazon sought to decrease its reliance on 3PLs earlier this year with the launch of Shipping with Amazon (SWA), posing competition to FedEx and UPS — and worrying their investors. But following the announcement, analyses and reports argued Amazon lacked the logistics infrastructure required to fully compete with the dominant 3PLs.
UPS said it wouldn't speculate on the potential impact of Amazon's program on its own business. "UPS is confident in its strategies and believes there is tremendous opportunity in the B2C market, and more growth coming," Glenn Zaccara, director of corporate media relations for UPS, told Supply Chain Dive in an email.
Many of the businesses joining Amazon's newest venture will have "little to no logistics experience," which may give 3PLs some breathing room before the competition heats up.
