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Business

Why Amazon gives employees $ 10,000 to quit




The so-called last mile of delivery – getting an order for the customer's door – has long been an obsession for e-commerce companies. In order to make the journey as effective as possible, some have engaged in extreme experiments. Take Walmart: Two years ago, trying to ask their employees to deliver online orders before and after work, in their own cars. This idea was later abandoned, but the problem of the last mile remains, even for the largest dealers. Amazon now offers to pay its employees thousands of dollars to deliver packages. They just have to finish their current jobs first.

In June, the Amazon Delivery Service Partner Program created allow entrepreneurs to create their own businesses that provide packages for Amazon. The idea was to get orders quickly, without having to rely on UPS or FedEx. On Monday, Amazon said it would start offering employees up to $ 1[ads1]0,000 in startup costs to leave its current positions to join the program, as well as three-month gross wages. The initiative comes as Amazon pushes to deliver Prime orders within a day instead of two, making the last mile even more important.

Not just anyone can sign up to be an Amazon Delivery Service Partner. You need to invest at least $ 10,000 and have at least $ 30,000 cash (the last requirement is lowered for employees). The strict rules can be one of the reasons why Amazon is now moving to its own workforce for help. The company says more than 200 delivery partners have grown in the past year, but the US labor market is still extremely close, and it is not clear how many more are able to join the program. In addition, Amazon seems to prefer to collaborate with smaller delivery companies. The website states that partners usually have fewer than 100 workers and 40 vans. There may be just as much growth left for Amazon's current partners, while delivery needs seem to have no limit in sight.

Supplier partners are considered as outsourced. The drivers working for them are not Amazon employees. While technically capable of working for any company, Amazon partners offer access to branded cars that can only be used to retrieve Amazon packages. That the hiring setup helps Amazon compete with companies like FedEx, who also have third-party drivers on the wheel of their branded vans and trucks. And it saves Amazon's responsibility for giving drivers benefits like health insurance.

That doesn't mean that Amazon has avoided using individual delivery drivers altogether. Since 2015, it has been due to its Uber-like Flex platform, where contract-driven drivers can sign up for shifts with Amazon packages for between $ 18 and $ 25 an hour before spending. The program is probably cumbersome to run, says Cathy Morrow Roberson, founder of the Logistics Trends & Insights research and consulting firm. She says companies should not rely on crowdsourcing for their entire last mile strategy, since it's difficult to plan around such an uncertain workforce.

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Amazon Flex has also proven to be a PR nightmare. A series of media surveys and personal data have documented the cruel work that can come to deliver to Amazon, and how drivers need to use face recognition.

On the other hand, delivery partners can handle their drivers, but they choose. That freedom can prove attractive to many current Amazon employees who are interested in starting their own company. Being a delivery partner can also be a smart business decision, especially since self-driving services are still years away. While Amazon quickly automates other parts of the supply chain, it will continue to need drivers that ensure that packages make it the last mile.

Meanwhile, Amazon's rivals are about to catch up: Walmart just announced it will deliver the next day Delivery as well.

Do you have tips on Amazon? Contact the author at louise_matsakis@wired.com or via Signal at 347-966-3806.


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