Amazon to Utilize Local Businesses for Package Delivery in the US

Amazon is set to launch its Amazon Hub Delivery system, which will utilize small businesses in 23 states, including California, New York, and Washington, to fulfill customer orders. The program requires participating businesses to have secure storage areas and deliver an average of 30 packages daily, excluding major holidays. Amazon is open to partnering with various business types, such as bodegas, coffee shops, and florists, for this initiative.

Hub Delivery is ultimately an extension of previous initiatives. Amazon introduced the “I Have Space” system in India in 2015 and expanded it to both Japan and Spain. The American pilot program started in late 2020, although it focused on improving delivery to rural customers. The new approach covers more than 20 major cities, including Boston, New York City and Los Angeles.

The incentives are clear. Amazon gets more reliable deliveries by outsourcing “last mile” shipments to small businesses instead of relying solely on dedicated couriers. Partners, on the other hand, can grow their business and supplement their income, Amazon VP Beryl Tomay says. Axios estimates that Amazon will pay about $2.50 per package on annual revenue of $27,000. The online retailer hopes to work with 2,500 small business drivers by the end of 2023.

The strategy comes months after Amazon announced mass layoffs as a pandemic recovery and a rocky economy ate into profits. It also comes on the heels of labor complaints that include past allegations of tip abuse by Flex drivers. In theory, Hub Delivery helps Amazon not only cut costs, but also minimize labor disputes that may arise from using its own employees for delivery. Not that the tech giant is completely averse to using its own staff. It is still committed to buying around 100,000 Rivian vans that deliver packages to customers.