Jeff Bezos captured the world’s imagination when he appeared on CBS’s “60 Minutes” and pledged to fill the skies with package delivery drones.
Five years on, Amazon.com Inc.’s chief executive officer is betting on decidedly more terrestrial technology: drivers. As in real people. Tens of thousands of them. High-tailing it through town in gas-slurping vans to leave packages on doorsteps just like the milk man, postal worker, UPS guy and pizza dude before them.
Bezos this summer issued a call-to-arms to aspiring entrepreneurs, offering them a chance to earn $300,000 a year by starting their own businesses making Amazon deliveries. All for as little as $10,000 up front, far less than the $250,000 it takes to open a fast-food franchise like McDonald’s or the $1 million required to buy a typical FedEx delivery business.
Instead of charting a future that makes drivers obsolete, Amazon is so dependent on them it’s copying FedEx Corp. to build a network of independent couriers around the country in a frantic effort to keep pace with demand that peaks in December. To entice interest, Amazon uses its bargaining power to get partners good deals on vans and insurance and offers them a steady stream of packages. The Bezos proteges take on the biggest challenge of all: recruiting and hiring drivers willing to meet Amazon’s high standards for low pay. All when there are plenty of other jobs to pick from.
The effort puts Amazon in legally murky terrain where it has to be careful how much control it exerts over people employed by different companies. The company already faces multiple lawsuits from delivery drivers claiming to be stiffed wages by Amazon partners. Those workers say Amazon is on the hook, as well, since they toil on the company’s behalf. But the risks could be worth it if Amazon finds a legal way to add drivers and vans without spending its own money. The model gives it far more negotiating power over each small business partner than it has with United Parcel Service Inc., FedEx and the postal service.