Drones are still a little far away. Amazon now relies on outsourcing to deliver goods. In order to meet the strong demand of prime users, Amazon is transferring the cost and risk of package delivery to the "Mom and pop store" in the express industry
according to foreign media reports, in order to meet the strong demand of prime users, Amazon is transferring the cost and risk of package delivery to the "Mom and pop store" in the express industry
Jeff Bezos, CEO of Amazon, promised to deliver packages by UAV in CBS' 60 minutes program. At that time, this news attracted worldwide attention
five years later, despite the increasing popularity of UAVs, Bezos has placed his bets on more grounded drivers. Like the milkmen, postmen, UPS couriers, and pizza delivery men, thousands of people drove gasoline vans all the way through town, dropping packages on the doorsteps of customers
last summer, Bezos issued a battle order to aspiring small entrepreneurs, providing them with an opportunity to earn $300000 a year. What these partners need to do is to set up their own companies and deliver goods to Amazon. All these require only a US $10000 franchise fee, which is far lower than the US $250000 required to open fast-food chains such as McDonald's and the US $1million required to contract the business of FedEx
obviously, Amazon has not outlined a future era in which drivers will be eliminated. Instead, Amazon is more dependent on drivers. Following the example of FedEx, it is building an independent and huge express network all over the country, trying to keep up with the demand peak in December. For the interest of small business owners, Amazon uses its strong bargaining power to provide discounts for these partners in the purchase of delivery trucks and insurance, and to provide them with a steady stream of express business. But the biggest challenge for our followers is to recruit and hire drivers who are willing to meet Amazon's high standard delivery service at low wages when there are a lot of jobs to choose from
Amazon's move puts it in a legal blur. It must be careful about its relationship with employees of different companies. Amazon has faced a number of lawsuits against express drivers, claiming that Amazon's partners are in arrears. These drivers said that because they were working hard on behalf of Amazon, the company was to blame. On the other hand, if Amazon can find a legal way to increase the number of drivers and trucks without spending money, then these legal risks may be worth it. Compared with UPS, FedEx and USPS, this model gives each small business partner involved more bargaining chips
"both drone delivery and robot delivery are the future, but all these innovations are contrary to the current regulatory rules. Obviously, the speed of regulatory reform in this regard is too slow." Mike Howell, CEO of Dolly, an on-demand delivery company, said, "Amazon has no time to wait for the popularity of UAVs. The reason why it pursues this traditional model now is more out of need than desire."
so far, Amazon has attracted tens of thousands of people with lofty ideals who are eager to have the opportunity to serve the fast-growing e-commerce companies. The applicant passed the interview and then received several days of training. In just a few months, more than 100 new enterprises have sprung up across the country, employing thousands of drivers. More people are still waiting for the continued expansion of Amazon's delivery business next year
Riccardo Drago is one of Amazon's new partners. He has been delivering goods through Amazon flex, which is an application similar to Uber. People can use their own receipt to deliver goods. Drago and his wife Judy have always dreamed of starting their own business, so they accepted Amazon's test plan before Amazon announced the new distribution partner program last year
Drago used to run a bodyguard company. He was eager to make a good impression on customers on the first day, but there was a big problem. He ordered only two of the five trucks, but the company was assigned five delivery routes. Amazon offered to transfer the package, but Drago arranged two workers in each van, doubled the goods to be delivered by each van, and completed one of the delivery routes with his own Hummer. When he returned to the warehouse and thought he had finished the task, an Amazon manager asked him, "Hey, Ricardo, how much do you love me? Can you help me walk another way?"
without hesitation, Drago threw dozens of packages into the car, crossed the whole Denver, and returned to the warehouse less than an hour later, paralyzed on the ground. "Since then, I've been the talk of Amazon," he said. Drago's company now has a motto: "we will never give up any route." When a colleague falls ill or falls behind, his drivers will take the initiative to double the amount of packages they deliver
Bezos is counting on this spirit of "daring" to meet the insatiable needs of Amazon customers, while making partners like Drago profitable. Now, the Drago family has 42 trucks and 70 employees, each delivering about 250 packages a day. Drago said that their monthly profit is about $40000, and the average truck is about $1000. The biggest challenge for this small business is to hire and retain drivers. They can earn about $150 per 8-hour shift. "The unemployment rate in Denver is very low," said Drago's wife Judy, so it's hard for them to find a driver. Drago said he would send homemade Italian meatballs to the driver at the end of the shift to encourage the driver to continue working
if FedEx's experience can be used as a reference, Drago and other companies may be building valuable businesses. Tony dinitto, who used to run delivery routes and now provides consulting services to buyers, said that it would take at least a few weeks to find people who wanted to buy FedEx parcel delivery routes. Over the past five years, the return on investment of FedEx package delivery routes has climbed from about 2 times to about 3.3 times. He said that the seller would package and sell about 10 delivery routes for slightly less than $1million. The annual income before tax of one delivery route is usually about 25000 dollars, and the buyer can usually recover the investment within three to four years
dinito said, "I don't think there is a better business than FedEx. The revenue is very stable and growing. Over the past 10 years, the company's valuation has been growing slowly and continuously."
this model is also good for FedEx itself. The company said in an e-mail statement that it has 5600 business partners and employs nearly 50000 drivers, thus providing "larger service capacity and more operational flexibility". Dinito said that although FedEx needs partners, it will not let any partner develop too much. It usually limits the number of package delivery routes of a single partner to about 30. In contrast, Amazon limits the number of trucks owned by most of its delivery partners to about 40. However, in order to meet the demand of consumers, some small businesses have exceeded this limit
comparatively speaking, Amazon has basically become the victim of the success of this business. According to the data of consumer intelligence research partners, the company has 97million prime members in the United States. They pay monthly or annual fees in exchange for fast delivery services. They have little incentive to integrate their orders and improve the economy of package delivery. At present, package delivery is one of the fastest growing expenses of Amazon, exceeding the growth of sales. Amazon must find a cheaper way of express delivery, otherwise its e-commerce business may be difficult to sustain without raising the price of prime members. Amazon last year raised the annual fee of prime members by 20% to $120, the first increase since 2014
any company that delivers goods to Amazon must pay for vehicle purchase, gasoline and insurance. If Amazon's new partners want to make profits while reducing transportation costs, the most direct thing is to pay drivers less than competitors. The annual salary of UPS union driver employees is close to $80000, excluding overtime pay and medical and pension benefits provided by the company. By 2022, these wages will increase by 9.4%. The median annual salary for a U.S. Postal Service driver is $57000. Most FedEx contractors pay drivers about $40000 a year, and some provide medical benefits. However, these drivers did not join the labor union, and the employee turnover rate was higher than that of ups. In contrast, there are many people waiting to become UPS drivers. Amazon announced last October that all warehouse workers would be paid at least $15 an hour. The company did not specify how much the parcel delivery partner would pay the driver. However, according to the media interviews with two Amazon delivery partners, the chemical properties and physical forms of the plastics remain stable during the processing and use process;, Excluding overtime pay, the annual income of full-time drivers ranges from $30000 to $40000
in addition to saving salary expenses, Amazon's delivery partners should have a long injection and cooling time. Amazon is also allowed to provide a training for partners, and then the partners should bear the costs of recruiting, hiring and training delivery salesmen. Atif siddiqi, CEO of branch Messenger, a platform for autonomous shift adjustment of hourly workers, pointed out that the cost could be as high as US $4000 per person
he said: "at present, the cost of recruiting and retaining talents is very high." "But it should not be difficult for them to find people who want to start a business and run their own company."
last summer, Blake Vaughn readily accepted the opportunity to open an Amazon parcel delivery service in Fort Worth, Texas. After several interviews, he went to Seattle for a week of training, and officially established his own express company, Patriot DSP, in October. He owns more than 50 vans, employs nearly 100 drivers, and pays them at least $15 an hour, plus bonuses and benefits. As a Navy veteran, Vaughn received a $10000 start-up fund from Amazon. The company set up a $1million special fund to attract veterans to start businesses
Vaughn was impressed by all the basic work Amazon had done for him, which enabled him to start the business immediately. His previous franchising business required him to run it himself. Amazon has pre negotiated with indeed on recruitment, car purchase financing and insurance, health benefits of employees and equipment, and wireless services to help drivers navigate. The prices of all these transactions are better than he can get. "This is the beauty of relying on the huge Amazon architecture," Vaughn said
Amazon pays Vaughn per vehicle per month