Amazon’s Fast Delivery is Changing the Marketplace
People typically prefer to shop in a brick and mortar store because they can get the items the same day. Amazon is on a quest to disrupt that model. In exchange for a $119 per year annual fee, Amazon is on a fast track to putting items in the hands of its Prime Members through same-day and one-day delivery.
Amazon’s huge network of drivers can now provide same-day and next-day delivery to 72% of the U.S. population, including almost all the households (95% or more) in 16 of the wealthiest and most populated states and Washington, D.C., according to a report published in March by RBC Capital Markets.
Most retailers are just now starting to offer two-day shipping and will be forced to spend more on improving their logistics infrastructure to try and keep pace with Amazon. Even large retailers like Walmart and Target saw their shares drop following Amazon’s announcement of making two-day delivery the default for Prime members.
It’s no secret that Amazon wants to own every link in its logistics chain, from the warehouses to planes, cargo ships, and delivery trucks. Amazon reportedly now has twice as much distribution space as Home Depot. It also brought on small-business partners and purchased 20,000 Mercedes-Benz Sprinter vans to use for delivery. Amazon has even revealed a hybrid Prime Air delivery drone, that it hopes will one day compete with FedEx and UPS delivery trucks.
Currently, Amazon Prime’s two-day deliveries – totaling over 5 billion per year – are mostly handled by UPS, with FedEx filling gaps not plugged by UPS. Yet, a big part of its ability to deliver quickly is getting the package that last mile to each address. For this labor-intensive and expensive hand-delivery, Amazon Flex uses on-demand contract drivers.
Driving can be a lucrative career with a powerhouse like Amazon. So, who can drive for Amazon Flex? Anyone over 21 with a driver’s license, auto insurance and at least a midsize sedan is eligible to be a driver. After clearing a basic background check, drivers in areas with open spots in about 50 cities can start picking up and delivering packages.
Amazon’s footprint will continue to grow – and with that expanding footprint, will need more and more drivers to get the job done. Risk Innovations specializes in Workers’ Compensation for parcel services. We insure the companies that are hiring their FedEx, UPS and Amazon Flex drivers. Our expansive market access and expert underwriting provides insurance solutions for all risk types – including new ventures, high experience modifications and multi-state risks.