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Will Local Coffee Shops and Florists Help Amazon Expand Its Last-Mile Capacity?
Amazon.com is looking to partner with local businesses like coffee shops, florists and auto parts stores to make deliveries in their communities.
The retail, logistics and technology giant’s Amazon Hub program is currently recruiting small businesses in 23 states – Alabama, Alaska, Arkansas, California, Florida, Iowa, Indiana, Illinois, Massachusetts, Minnesota, New Jersey, New York, North Carolina, North Dakota, Ohio, South Dakota, and Washington, reports Axios. The company has set a goal of having 2,500 new small-business drivers by the end of 2023.
Vox reported in May 2022 that Amazon was quietly recruiting local businesses in rural areas to deliver its orders in Alabama, Nebraska and Mississippi. Participating companies were asked to make deliveries within a 10-mile radius.
Based on Axios’ reporting, Amazon thinks its Hub program will also work in more densely populated areas, targeting 20 cities, including Boston, New York, Los Angeles and Seattle, as it rolls out the service.
Participating businesses will be asked to deliver between 20 and 50 packages daily and will be paid for each one dropped off at its proper destination. Deliveries are made seven days a week with service suspended on major federal holidays.
Businesses looking to participate in the program must be available to receive packages daily and have a secure area to store them before they go out for delivery. They’ll need someone available daily to make the deliveries and be appropriately insured. Amazon doesn’t require prior delivery experience for businesses looking to participate.
Amazon has yet to publicly provide details on how much mom-and-pop businesses can earn making deliveries for it. Axios estimates that Amazon will pay $2.50 per package based on an annual income of $27,000. Participating businesses receive weekly direct deposits for the packages they deliver.
Beryl Tomay, vice president of Amazon last-mile delivery and technology, told Axios the new program will help “create opportunities for delivery partners interested in growing a business … and supplementing their income.”
Two businesses in Alabama, Herrington’s The Florist in Brewton and Greenville Auto Parts in Greenville, have become delivery partners for Amazon and sing its praises. The owners credit their participation in Amazon’s program with generating income to upgrade their existing businesses in videos posted on the Amazon Hub site.
Discussion Questions
DISCUSSION QUESTIONS: How do you see the Hub program fitting with the rest of Amazon’s last-mile delivery options? What are the pros and cons of the program for Amazon and its new delivery partners?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Gary Sankary
Retail Industry Strategy, Esri
This is a creative approach to the last-mile delivery challenge. Many small business are struggling to generate sales, so generating additional delivery revenue may be welcomed for many. However, given the small size of these operators, there’s a risk that Amazon delivery could overwhelm or highly distract these businesses. Overall, I think the program has potential, and for the right business, this could be a nice way to generate incremental revenue. But any operator considering this needs to go into it with their eyes wide open.
Amazon is going to drive traffic. That is either a blessing or a curse depending on the delivery partner and their unique business model, clientele, staffing model, etc. On the whole, however, I believe this will be a great solution for driving traffic, awareness and sales for small business.
If the local business has the time and staff available to deliver packages in their community on their time and be paid for it, why not? It may not be a permanent thing but extra cash can be helpful to an indie business.
This is a positive for Amazon, but $27,000 a year isn’t a lot of money to be paid for wear and tear on an indie’s own vehicles, plus the cost of the insurance necessary to make deliveries. Time away from your own business and your own customers has consequences and they are not always good.
This is an interesting approach that makes sense for Amazon. I’m not sure it makes sense for small businesses. Amazon is not known for its generosity in paying partners. Businesses will have to ramp up employees and all the expenses to support a workforce to support this and once they start, will Amazon’s requirements allow them to make enough money to grow at scale?
It makes sense for Amazon but it represents an entrepreneurial dilemma for the small business owner. As with any business, the Amazon business must be properly funded (time, money, resources) and that means either externally funding it (treating it independently of the primary business) or internally funding it (sharing funding with their primary business). I’ve often seen these types of opportunities drown the primary business or at least significantly impact its growth. However, it’s possible that as small business owners in small towns, their primary businesses are gig-like ventures and this is just building a mini-conglomerate of gigs. I think the Hub Program makes sense and will work for Amazon but I would urge local business owners to properly think it through and evaluate the impact to their primary businesses.
Here again, the burden(s) would seem to fall on business owners, who will be responsible for building staff, scheduling, vehicle maintenance, and other foundational elements. Hopefully, these businesses will look long and hard at the tradeoffs. An additional concern is Amazon creating an even more fragmented delivery network that could compromise customer service and increase liability.
This. Exactly.
Love the concept, but it sounds like the learning curve could be painful. And it’s not just added revenue for the local business, it’s a whole new layer in their potential relationship with the surrounding community. Great last-mile performance could be a big boost to the existing business. But poor last-mile performance could be a big detractor to the existing business. Be careful what you wish for.
The opportunity for independent businesses to increase revenue is a gift. If the volume gets overwhelming, the businesses have recourse. Expand, accept only what they can process comfortably, or give up the program. At first blush, the concept is a win/win. These independents probably know the neighborhoods to which they are delivering and they probably know some of the customers too!
Amazon already celebrates smaller brands as Prime Day stars. Now Amazon welcomes smaller retailers as partners who permeate its reach with local delivery networks.
With the Hub program, Amazon gets closer to our homes and speeds up delivery by outsourcing to local players. However, it loses control over the quality of last mile service.
Local delivery partners earn new incremental revenue and credibility from collaborating with a retail giant. Delivery is not their core competency so they need to invest in dedicated resources.
As Amazon, Fedex, UIPS, the odd Grocer drives through our neighborhood, each stopping at the same houses, yielding in the evenings to the Dashers and Ubers one is left with a sense of waste that one truck more densely and frequently loaded, circling the neighborhood multiple times a day and doing that last mile delivery for everyone would be most efficient. I guess that’s not in the cards so local vendors is a good second. At least it cuts down the total distance travelled and environmental waste.
There’s a feel of Amazon circling the drain here. Of course that’s not true. Yet their desperation about shipping costs and last mile indicates something far deeper is wrong than Amazon has ever admitted.
As an alternative idea, what if Amazon charged for shipping in order to cover those costs which cannot go away! They have a premium service but have told people to expect premium at discount prices. Some day that truth will come home to roost in investor expectations.
Amazon has ordered 100,000 EVs for local delivery. They have 30,000 in place.
Using local merchants to support local delivery is a good idea. Is it sustainable? Is Amazon taking the most efficient local delivery routes for themselves and leaving the more difficult ones for these retailers? For those local merchants, this will not be an add-on business but an entirely new business. Do they have the skills?
As I read this I thought of one of my favorite quotes by Steve Jobs. “Don’t let good ideas get in the way of great ideas.”
All this will do is become a distraction for the small business owner. What if they spent the time and energy focusing on growing their business?
One of my mentors taught me that a key skill in business is learning how to say no. This will distract “mom & pops” from their core business, putting that very business at risk.
I agree, but many will do it in any case.
This make sense if there is an existing delivery model in place and the amazon agreement adds to the traffic. There’s a lot of startup cost involved, plus amazon’s TOS for delivery could cause issues (deliver your order or the amazon package first?)
Small business definitely should read the fine print and add up the numbers before deciding whether it works for them
The win-win here is in partnering with businesses where Amazon doesn’t compete, such as Coffee shops and Florists. These small businesses will want to take full advantage of marketing offers, doing what makes sense to bring these Amazon customers into their space to boost sales.