(Editor’s Note: In today’s Thursday Feature, we are going to look at a new delivery service being launched by online retail giant Amazon that could change the way you get your packages delivered.)
Hoping to replicate the success of the passenger service app Uber, Amazon this month launched a similar service that delivers packages rather than people.
Amazon Flex is now available in Amazon’s home city of Seattle and will soon spread to eight other cities, including New York and Portland, Oregon. And the world’s largest retailer eventually hopes to expand it nationally and ever in other countries.
An Idea that Works
The new package delivery service is based on Uber, the “Why didn’t I think of that” app that matches people needing rides with drivers willing to take them where they want to go.
If you have never used Uber, you are missing out on an incredible experience.
Once you download the app and sign up for the service — which requires nothing more than an email address and a credit card number — you can seamlessly find a ride (in just minutes in most cases) and get dropped off at your location without any money ever changing hands.
The app shows you right on your smartphone or tablet how close drivers are to your current location. It allows you to choose the type of vehicle you want to travel in — from a standard sedan to SUV to luxury vehicle — and automatically gives you an estimated cost of your trip.
Benefits to Drivers
Drivers can choose to work whenever they want and be off the clock as much as they choose, making it a good option for people looking to supplement their income. They don’t even need to have an extensive knowledge of geography because drivers can use location apps to plot out their trips turn by gurn.
Qualifications are minimal. All you need is to be at least 21 years old, have a car, a valid driver’s license, a clean background check, and a smartphone.
Costs are charged directly to the rider’s credit card and the money is split between Uber and the drivers, who are just ordinary folks willing to drive strangers around in their car.
Amazon Flex is expected to work exactly the same way, only with small packages rather than people. And it could revolutionize the package delivery industry the way Uber has put a huge dent in the taxi cab industry.
Benefits to Amazon
Amazon already has invested huge sums of money in infrastructure to support its massive online retail operations. But Amazon Flex could be run completely independently — although it’s not immediately clear whether the service will be used to deliver products purchased from Amazon from distribution centers to consumers.
To keep Amazon Flex operational, the company doesn’t have to invest anything in vehicles, employees, or overhead. Like Uber, Amazon Flex drivers are independent contractors who work for an hourly rate that is automatically calculated and paid out by the app. The only thing Amazon has to worry about is recruiting enough drivers, conducting background checks and vehicle inspections, and maintaining the technology.
It’s a low-cost way to get into a high-profit industry essentially overnight.
Impact on the Package Delivery Industry
What kind of a market share Amazon Flex will be able to carve out of the multi-billion dollar package delivery industry remains to be seen. The biggest players — which include UPS, FedEx, and the US Postal Service — have invested huge sums in infrastructure and inventory and employ millions of people, not to mention all they spend marketing their services.
But once users discover the convenience and potentially lower costs of Amazon Flex, it’s possible that this upstart company could steal away a huge amount of their business.
Fallout of Industry Changes
So who’s hurt by this industry shift? For one, it could be people who are employed by such cutting-edge companies as Uber and now Amazon Flex who are no longer classified by employees and, therefore, aren’t entitled to health insurance, paid time off, and other benefits.
Numerous lawsuits have been filed by people hoping to force companies to reclassify their independent contractors as actual employees, but so far the courts have largely sided with the companies.
But nobody is forcing these workers to choose these jobs, which allow drivers to work according to their own schedule. And they tend to pay a fair rate: Amazon Flex is advertising that drivers can earn $18 to $25 per hour.