The ogre of e-commerce encourages its current employees to resign to create their own delivery company. Amazon promises to offer $ 10,000 and three months of gross salary to every employee subscribing to the program. The goal: to satisfy its increasingly important delivery needs, without bearing the logistical and wage costs.
To build an army of deliverymen and maintain its leading position in e-commerce, Amazon is ready for anything. The ogre of e-commerce encourages his current employees to leave their job within the firm … To create their own delivery company. A key: the company of Jeff Bezos promises to provide 10,000 dollars of financial aid to start his business and three months of gross salary, according to an announcement made Monday, May 13. These companies are intended to ensure delivery on “last mile”.
Employees who choose to set up a delivery company will have to officially leave Amazon, the company said. In return, it promises to provide them with a steady stream of orders and access to its delivery technology. Delivery men will have the opportunity to rent Amazon vans and uniforms … enough to keep the deliverymen in the bosom of the company, like the techniques used by the meal delivery companies such as Deliveroo or Frichti, who strongly urge their couriers, though self-employed, to wear uniforms bearing the image of their brand. Other benefits will be negotiable, such as “legal support and insurance options,” according to Amazon.
200 delivery companies created since June 2018
Valid in the United States, the United Kingdom and Spain, this incentive is part of the program “Amazon Delivery Service Partner”, launched last June. About 200 companies have already been created, according to Jeff Bezos’ company. A good way for the Seattle firm to outsource its delivery – to deliver more products, always faster – but without having to bear all the logistical and wage costs. Deliverymen of this program could handle about half of Amazon’s “last mile” orders by 2022, according to an analyst interviewed by the Wall Street Journal. Amazon wants to reduce its dependence on large delivery services, such as FedEx or UPS, which are increasing its margins.
By imposing ever faster delivery times, Jeff Bezos’ company has huge distribution costs. For example, it offers its premium subscribers a one-day delivery on certain products (Amazon claimed 100 million subscribers worldwide in April 2018, editor’s note).
Delivery, Achilles’ heel of Amazon’s profits
In the first quarter of 2018, the net profit realized by the e-commerce activity in the United States and internationally was 2.19 billion for a much higher turnover (52 billion dollars). The company is only profitable in its domestic market, the United States, but it continues to lose money in the rest of the world (90 million dollars, against 622 million a year ago) because it has not yet reached a sufficient number of users to offset its huge distribution costs.
In late April, Amazon’s chief financial officer, Brian Olsavsky, said the group was preparing to spend $ 800 million in the second quarter of 2019 to improve its warehouses, delivery infrastructure and reduce transit time.