Contractors don't have to lease the vans, but if they do, those vehicles can only be used to deliver Amazon packages, the company said. The contractor will be responsible for hiring delivery people, and Amazon would be the customer, paying the business to pick up packages from its 75 U.S. delivery centers and dropping them off at shoppers' doorsteps. An Amazon representative declined to give details on how much it will pay for the deliveries.<doc-sep>SEATTLE • Your Amazon packages, which usually show up in a UPS truck, an unmarked vehicle or in the hands of a mail carrier, may soon be delivered from an Amazon van. The online retailer has been looking for a while to find a way to have more control over how its packages are delivered. With its new program, which rolled out Thursday, contractors around the country can launch businesses that deliver Amazon packages. The move gives Amazon more ways to ship its packages to shoppers without having to rely on UPS, FedEx and other package delivery services. With these vans on the road, Amazon said more shoppers would be able to track their packages on a map, contact the driver or change where a package is left — all of which it can’t do if the package is in the back of a UPS or FedEx truck. Amazon has beefed up its delivery network in other ways: It has a fleet of cargo planes it calls “Prime Air,” announced last year that it was building an air cargo hub in Kentucky and pays people as much as $25 an hour to deliver packages with their cars through Amazon Flex.<doc-sep>Amazon is expanding further into package delivery and promising to support a new wave of small business owners with the launch of a program that helps entrepreneurs start and run their own companies — delivering items purchased on Amazon.com in distinctive blue Prime-branded shirts and vans. It’s “the next big building block of our end-to-end supply chain,” said Dave Clark, the Amazon executive who oversees the worldwide delivery logistics infrastructure for the e-commerce giant, in an interview with GeekWire, after a preview of the service for reporters in Seattle on Wednesday. Amazon is announcing the new “Delivery Service Partners” program tonight. It’s the company’s latest move to build its own alternative to (if not yet a replacement for) UPS, FedEx, the U.S. Postal Service and other traditional shipping companies and postal services. From Prime-branded planes to smiling blue delivery trucks, the Seattle tech giant is increasingly handling the shipping and delivery of items purchased on its site. The announcement comes a few months after Amazon’s economic impact on the USPS was publicly questioned by President Donald Trump in a series of widely discussed tweets. The new program lets anyone run their own package delivery fleet of up to 40 vehicles with up to 100 employees. Amazon works with the entrepreneurs — referred to as “Delivery Service Partners” — and pays them to deliver packages while providing discounts on vehicles, uniforms, fuel, insurance, and more. They operate their own businesses and hire their own employees, though Amazon requires them to offer healthcare, paid time off, and competitive wages. Amazon said entrepreneurs can get started with as low as $10,000 and earn up to $300,000 annually in profit. Amazon is increasingly relying on its own logistics infrastructure as shipping costs continue to spike with growing demand, particularly from Prime members who pay $119 per year for free 2-day shipping and access to Amazon’s 2-hour Prime Now delivery service. It now has 7,000 truck trailers and 40 jumbo jets that shuttle packages to and from 125 fulfillment centers across the world. In the past, Amazon relied on third-party providers for costly “last mile” deliveries — those from the warehouse to the customer. But now it is experimenting with new delivery methods. In 2015, the company launched a program called Amazon Flex, the company’s Uber-like platform that lets everyday people packages with their own cars. One year later it started experimenting with its own delivery operation. Amazon also last year reportedly tested a service called “Seller Flex” in the U.S. that consists of the company picking up packages sold on its site directly from third-party warehouses. Clark, a 19-year Amazon veteran who oversees worldwide delivery logistics infrastructure, said the new “Delivery Service Partners” program is not so much an evolution of Amazon Flex — which will continue to exist — but more of an addition to the company’s overall delivery network. Asked about potential impact on Amazon’s deals with third party carriers, in particular giants like UPS and FedEx, Clark said the company has “great relationships with our partners today and I don’t see any reason for that to change as we go out in the future.” He added: “You will see the amount of Amazon delivery vehicles on the street grow in the years to come. There will be a diverse mix of providers for the foreseeable future.” The program is also a new way for the company to expand its reach without directly employing drivers. Amazon’s direct employee base has skyrocketed to more than 550,000 people worldwide. In addition, the service could be used to power medication deliveries, given Amazon’s announcement Thursday to acquire PillPack. The tech giant unveiled the program in a unique way. It invited reporters from across the country to Seattle and met them at the company’s headquarters in South Lake Union before shuttling everyone to a fancy historical venue overlooking the city’s skyline. Many expected Amazon to announce a drone program or water-related initiative, given the hyped up event and picturesque setting. But the company instead drove a Prime-branded delivery van onto the lawn that served as a makeshift press conference area. In his remarks to the crowd, Clark likened the program to the company’s marketplace platform which lets third-party sellers run their own storefronts that are supported by Amazon. More than half of products sold on Amazon.com now come from third-party sellers. Clark pitched it as a way for entrepreneurs to operate their own delivery business without worrying about sales activity. “They get an opportunity with our demand to have a good consistent volume and to grow with Amazon as we grow,” he said. Olaoluwa Abimbola, one of Amazon’s beta participants for the new program, also spoke at Wednesday’s event. Abimbola started as a Flex driver but is now running his own delivery operation. “This means the world to me,” he said. “This opportunity provides a future for my family, for my daughters.” As part of the new program launch, Amazon is committing $1 million to military veterans, offering $10,000 reimbursements for qualified candidates. And as for the cost-effective drones that reporters expected on Wednesday — that’s still on the roadmap. “People tend to want to always say X replaces Y,” Clark said. “For us, it’s always X plus Y. It’s not about replacing one thing for another. It’s all about how do you increase the total size of the pie. That’s what this is about; that’s what drones will be about; that’s what other innovations will be about. It’s new experiences enabling growth and enabling innovation.” As Amazon invests more into its delivery infrastructure, the company’s traditional retail rivals, including Walmart, Best Buy and Target, are also spending big on their own e-commerce and shipping initiatives. UPS, meanwhile, also continues to invest in its own delivery network. Amazon has an advantage over competitors, in that it can leverage growing profits from its Amazon Web Services cloud computing division to allow its e-commerce operations to run on razor-thin profits margins, and even at a loss. Amazon’s shipping costs ballooned to $21.7 billion in 2017, up from $16.2 billion in 2016 and $11.5 billion in 2015. In its annual 10-K SEC filing published this past February, the company said it expects the cost of shipping to continue increasing. Amazon changed its Prime annual membership rate from $99 to $119 this year. “We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies,” Amazon said in the 10K filing. “We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.”<doc-sep>
SEATTLE -- Your Amazon packages, which usually show up in a UPS truck, an unmarked vehicle or in the hands of a mail carrier, may soon be delivered from an Amazon van. The online retailer, wanting more control over how its packages are delivered, rolled out a program Thursday that lets entrepreneurs around the country launch businesses that deliver Amazon packages. They'll be able to lease blue vans with the Amazon logo stamped on it, buy Amazon uniforms for drivers and get support from Amazon to grow their businesses. In return, Amazon gets more ways to ship its packages to shoppers without having to rely on UPS, FedEx and other package delivery services. With these vans on the road, Amazon said, more shoppers would be able to track their packages on a map, contact the driver or change where a package is left -- all of which it can't do if the package is in the back of UPS or FedEx truck. Amazon has beefed up its delivery network in other ways: It has a fleet of cargo planes it calls "Prime Air," announced last year that it was building an air cargo hub in Kentucky, and pays people as much as $25 an hour to deliver packages with their cars through Amazon Flex. Recently, the company has come under fire from President Trump, who tweeted that Amazon should pay the U.S. Postal Service more for shipping its packages. In April, Mr. Trump tweeted, "I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer. Many billions of dollars. P.O. leaders don't have a clue (or do they?)!" In fact, packages and shipping have been an area of growth for the Postal Service that has offset the decline in volume of letter and magazine delivery. USPS said in its annual report last year that its revenue growth "is driven entirely by increases in shipping and packages." It loses money every year largely because of pension and health care costs, and not, as the president claimed, because Amazon is using USPS as its "delivery boy." Dave Clark, Amazon's senior vice president of worldwide operations, said the new program isn't a response to the president, but a way to make sure the company can deliver its growing number of orders. "This is really about meeting growth for our future," Clark said. Through the program, Amazon said it can cost as little as $10,000 for someone to start the delivery business. They don't have to lease the Amazon blue vans, but if they do, those vehicles can only be used to deliver Amazon packages, the company said. The entrepreneur will be responsible for hiring delivery people, and Amazon would be the customer, paying the business to pick up packages from its 75 delivery centers around the country and delivering them to shopper's doorsteps. An Amazon representative declined to give details on how much it will pay for the deliveries. One man who was part of Amazon's test of the program told reporters that the number of packages Amazon needs to be delivered keeps his business busy. "We don't have to go make sales speeches," said Olaoluwa Abimbola, who has hired 40 workers in five months. "There's constant work, every day. All we have to do is show up."