Yahoo Finance Amazon Is Testing Speedy Delivery Service Featuring Kia Souls
(Bloomberg) -- Amazon.com Inc. has deployed a new secret weapon in its same-day delivery operation: a convoy of Kia Souls.
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The boxy little vehicles, already zooming around metro areas such as Seattle and Dallas, are a recent addition to the company’s six-year-old Delivery Service Partner initiative, which outsources the hiring and management of drivers to small contracting firms that typically lease Prime-branded trucks and vans.
While van drivers mostly work full shifts hauling 200 or more packages, the Kia drivers are usually part-timers who might bring 50 items on a four- or five-hour shift, according to job postings and people familiar with the initiative.
The new service is designed to handle quick deliveries that the company currently delegates to its Amazon Flex gig economy service, say the people, who requested anonymity to discuss an internal matter. Broadening out beyond the depots and delivery firms currently piloting the program could give Amazon greater control over deliveries and reduce its reliance on Flex, which has been criticized for treating workers unfairly — a charge the company denies.
Chief Executive Officer Andy Jassy is determined to streamline and speed up Amazon’s logistics network, which doubled in size during the pandemic. The company has shuttered warehouses even as it continues to build massive new ones, and is staging goods at facilities closer to customers. Today, Amazon says fewer employees handle each package, which in turn allows them to make shorter trips.
On a call with analysts earlier this month, Jassy said there were “a number of opportunities to further reduce costs” in logistics, including increasing the use of automation and robotics and expanding the number of same-day delivery sites.
Amazon pitched its new service, the Same Day Delivery Program for Delivery Service Partners, at a conference for contract drivers last September, according to one of the people. The company has launched or plans to launch the service in Florida, Illinois, Massachusetts, Ohio, Texas and Washington, according to the people and job postings. On a website for delivery contractors, Amazon says the program gives drivers more flexible working hours and routes “using smaller passenger vehicles or cargo vans.”
“We’re always testing new ways to support our Delivery Service Partners, and multiple shorter routes in a given day is something that they have requested,” Amazon spokesperson Steve Kelly said in an emailed statement. “This approach also supports our fast same-day orders that Prime customers love.”
The Kia Soul drivers deliver packages from what Amazon calls “sub-same day” warehouses, depots typically located closer to urban customers than the company’s massive fulfillment centers. Amazon last year said it would double the count of such facilities in the coming years, part of a push to stay ahead of big US retail rivals and upstarts like Temu and Shein that can’t typically match Amazon on delivery speed.
Those sub-same day warehouses now primarily use Amazon Flex drivers, who drive their own vehicles. During periods of peak demand, they have earned as much as $30 a hour, relatively decent money for this kind of work. But four US-based Flex drivers, who requested anonymity to avoid alienating Amazon, say these so-called surge payments have grown vanishingly rare. Three of the drivers, who deliver in large metropolitan areas, say base pay rates at some warehouses they frequent have been cut in the last year. The company says US Flex drivers are paid more than $26 an hour.
The on-demand employment model, which Flex shares with Uber and DoorDash, remains controversial. Labor activists argue that drivers should be classified as Amazon employees entitled to health care and other benefits, claims drivers occasionally make in court. Some 16,000 Flex drivers filed arbitration claims earlier this year, arguing that Amazon wrongly denied them wages and other compensation. The company has said the program lets workers set their own schedules and be their own boss.
“Amazon Flex is and will continue to play an integral role in our growing last-mile delivery network, and claims to the contrary are inaccurate,” spokesperson Kelly said.
Spencer Patton, who advises Amazon delivery contractors, said shifting deliveries from Flex to Delivery Service Partners gives the company more control. DSPs are technically independent businesses and employ their drivers directly, but Amazon exercises a great deal of sway over how they operate. Patton also said that using part-timers driving inexpensive vehicles is much cheaper than paying delivery contractors using vans with higher fixed costs.
“It make sense for Amazon,” he said.
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