Main Street stores beware: Amazon wants you.
One of AmazonAmong its latest growth plans is recruiting 2,500 small businesses in 23 states to help deliver packages. Amazon says the initiative, called “Amazon Hub Delivery,” could help Main Street businesses — like florists, coffee shops, hair salons and gas stations — generate up to $27,000 in additional revenue per year.
The Hub Delivery program is similar in some ways to Amazon Flex, which launched a few years ago and offered everyday people the ability to deliver packages for the company using their own vehicle. According to Amazon, this initiative is now in over 100 cities and towns across the United States. The new program is currently open to businesses in 23 states: Alabama, Alaska, Arkansas, California, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota , Ohio, Oklahoma, South Dakota, Washington and Wisconsin. Amazon said it expects to expand to additional states and cities in the future.
The new delivery partnership model could prove viable for Amazon as it offers the potential for faster deliveries and higher customer satisfaction. “There are also significant benefits for companies selected to participate, namely the opportunity to expand and grow through an additional revenue stream,” said Shanton Wilcox, partner at PA Consulting, a strategy and operations firm. But companies also need to understand the potential costs of the commitment.
“It’s not a random decision where the company’s van is parked and not used for a few days a week and we’ll see how it goes. It’s a business decision,” Wilcox said.
Here’s what small business owners need to know about the new Amazon program:
It doesn’t just apply to existing Amazon sellers
Amazon is committed to working with all types of companies that are able to deliver packages on the company’s behalf. Amazon Hub Delivery partner selected via ApplicationYou will receive packages every morning and have the flexibility to make daily deliveries at your convenience, using existing staff if necessary.
According to Amazon, companies deliver 20 to 50 packages per day, with an average of 30 per day. Deliveries are made seven days a week, excluding five major holidays. The program is available in very rural areas as well as densely populated urban areas such as New York City and college towns. According to Amazon on its website, no delivery experience is required and there is no long-term contract. Amazon says it will provide training and guide companies through the process.
Small businesses must meet several criteria
The program only works if a small business meets Amazon’s criteria. Firstly, there must be a safe space to store the packages. Small businesses wishing to apply must also have copies of relevant documents such as a state business registration number, sales tax permit, or registration or tax identification number.
You must also be able to meet Amazon’s delivery obligations. Businesses that are not open for seven days may also be eligible, as long as they can receive and deliver Amazon packages on all required days.
Partner and driver (if applicable) must have a criminal history and pass a motor vehicle, OSHA and Department of Labor background check. You must also have appropriate insurance. This means general liability insurance and, if necessary, workers’ compensation insurance. Companies can get Further details on insurance requirements by watching a webinar.
The economic benefits of being an Amazon delivery partner
Becoming a delivery partner isn’t attractive or applicable to every small business, but interested parties should ask a series of questions to determine whether it’s worth pursuing, said Santosh Sankar, co-founder and managing partner at Dynamo Ventures in Chattanooga, Tennessee , which invests in early-stage supply chain startups.
Companies need to go through the math to figure out whether a partnership makes sense for them, Sankar said. Amazon hasn’t specified exactly how much it pays per package; but based on his profit estimates of $27,000 per year, the price would be $2.50 per package, assuming 30 packages per day for 360 days. In this scenario, a company could make $75 per day.
The question then becomes whether existing staff can be used for the new venture or whether additional capacity and labor and equipment costs are required. For example, this might make sense if a company already pays a high school or college student $15 an hour and the worker has three additional hours of capacity and an available delivery vehicle. It might even be beneficial to hire an additional worker at this rate, Sankar said. However, if a company needs to purchase a company vehicle for deliveries or undertake extensive renovations to create a safe space, the additional investment may not be worth it.
Companies should also consider long-term growth potential. “It’s not just about exploiting your existing capacities. It’s the potential for expansion that many companies are looking for, but it needs to become part of the decision-making process,” Wilcox said.
Where to get more information
There are local in-person and virtual events for small businesses to learn more about the program. The next event is scheduled for September 6th in California. Owners can also contact Amazon directly to arrange an in-person meeting.