Amazon wants its employees to start their own businesses — delivering packages for Amazon.
The company announced a program Monday that will offer employees who quit their jobs $10,000 plus three months’ gross salary to start companies delivering Amazon AMZN, +0.54% packages.
The announcement comes just two weeks after Amazon announced it will offer one-day shipping for members of its $119-a-year Amazon Prime program. Amazon said it expected to spend $800 million in the second quarter on implementing that new, faster delivery option.
A spokeswoman said Monday that expanding the “delivery service partner” program was already in the works before Amazon announced one-day Prime delivery. “However our continued investment in our Delivery Service Partner network aids our ability to deliver to customers faster,” said Amazon spokeswoman Amanda Ip.
Competition is heated among retailers trying to get purchases to consumers faster than ever. Amazon is battling against stores including Walmart WMT, +0.30% and Target TGT, -1.33% who’ve expanded their delivery options in recent years. Shoppers value shipping options. A 2018 survey found that nine out of 10 shoppers said free shipping was their No. 1 reason for shopping online more often. Walmart was expected to address Amazon’s move into one-day shipping during an earnings call Monday.
Amazon workers who sign up for the program will also get discounts on “Amazon-branded vans customized for delivery, branded uniforms and comprehensive insurance,” the company said. Delivery service owners running 20 to 40 vans can expect to bring in annual revenues of $1 million to $4.5 million, with profits of $75,000 to $300,000, Amazon says in a brochure about the program.
However, those figures are projections and not based on the actual results of delivery companies that are already operating, Amazon notes in the brochure’s fine print. “We do not guarantee results of any kind, including that what a delivery company earns will exceed the owner’s investment in his or her business,” Amazon says. The caveats also note: “A delivery company may not achieve the profit figure if its expenses exceed these amounts.”
The typical Amazon employee made under $30,000 in 2017, the company said in an SEC filing. It has since raised the minimum starting wage for its workers to $15 an hour, or roughly $30,000 a year, assuming a 2,000-hour work year.
Monday’s announcement marked an expansion of Amazon’s existing delivery service partner program, which the company opened to anyone who was interested (not just Amazon employees) in June 2018. Since then, Amazon has fielded “tens of thousands” of applications for the program, said Dave Clark, senior vice president of worldwide operations, in Monday’s announcement.
See also: Why Amazon Prime’s free one-day shipping isn’t quite what it seems
Not everyone who applies gets a slot. A list of questions and answers about the program warned that it’s “highly competitive” and there are a limited number of openings. And applicants should be prepared to work hard, the company said. Applicants will have to run a full-time business that involves hiring and training a team of drivers. The program “would not be a good fit” for people who want to make a passive investment or work part-time, Amazon said.
The company said start-up costs are as low as $10,000, but a screening questionnaire asks people who are interested in the program whether they have at least $30,000 in available liquid assets, and says that they’ll have to submit financial information, including a list of their assets and liabilities.
Amazon has come under fire for how it treats its workers and its negative effects on mom-and-pop brick and mortar retailers. In Monday’s announcement the company highlighted its programs to help workers, including paying 95% of tuition costs for employees who want to educate themselves on “in-demand fields.” Amazon responded to some of those criticisms by raising its minimum employee wage to $15 an hour in 2018. CEO Jeff Bezos recently urged his competitors to follow suit.
Amazon shares are up 22% this year compared to a 8.8% increase for the Dow Jones Industrial Average DJIA, +0.48% and 12.5% gain for S&P 500 SPX, +0.59%
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