Amazon is taking a new approach to improve its last-mile delivery by launching the Amazon Hub Delivery system. This system will utilize small businesses located in 23 states across the United States, including California, New York, and Washington, to complete shipments to customers. The small businesses that participate in the program must have secure storage areas and be able to deliver an average of 30 packages each day, excluding major holidays. It is not limited to specific types of businesses, meaning that bodegas, coffee shops, florists, and other establishments can all qualify to join the program.
The concept of Hub Delivery is not entirely new, as Amazon has previously experimented with similar initiatives. In 2015, the company introduced the “I Have Space” system in India, which was later expanded to Japan and Spain. In late 2020, a pilot program was launched in the United States, but it primarily focused on improving delivery services in rural areas. The current expansion covers over 20 major cities, including Boston, New York City, and Los Angeles.
Both Amazon and the small businesses participating in the Hub Delivery program have compelling incentives. By involving small businesses in the last-mile delivery process, Amazon can ensure more reliable deliveries compared to relying solely on dedicated couriers. This approach allows Amazon to offload some of the delivery responsibilities to local businesses, while its partners have the opportunity to grow their businesses and supplement their income. Beryl Tomay, Vice President of Amazon, believes that this collaboration will benefit both parties involved. According to estimates by Axios, Amazon pays approximately $2.50 per package, resulting in annual earnings of $27,000 for small business drivers. Amazon aims to partner with 2,500 small business drivers by the end of 2023.
The decision to implement the Hub Delivery system comes at a time when Amazon has faced challenges due to the pandemic’s impact on the economy. The company recently announced mass layoffs as a result of decreased profits. Additionally, Amazon has faced labor complaints, including allegations of labor law violations and mishandling of Flex drivers’ tips. By involving small business drivers in the shipping process, Amazon hopes to reduce costs while minimizing the labor disputes that could arise if they were to solely rely on their own workforce for deliveries. Despite this shift, Amazon remains committed to its plan of purchasing around 100,000 Rivian delivery vans to transport packages to customers.
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The introduction of Amazon Hub Delivery represents a significant step forward for the company’s logistics operations. By partnering with small businesses, Amazon can enhance its last-mile delivery capabilities and ensure timely and efficient shipments to customers. This new approach also presents an opportunity for small businesses, allowing them to collaborate closely with Amazon and benefit from the company’s massive customer base. Overall, the Hub Delivery system has the potential to revolutionize the way packages are delivered, supporting local businesses while meeting the growing demands of Amazon customers.
