With one announcement, Amazon’s attempting to change the future of work as we know it. The massive company just launched a Delivery Service Partners initiative, which on its surface aims to empower entrepreneurs to launch a package distribution business on Amazon’s behalf. It’s likely part of a broader play by Amazon to compete with UPS and FedEx, as the company has indicated it will soon offer delivery services to businesses.
In this new Delivery Service Partners model, entrepreneurs lease vehicles with Amazon branding, buy Amazon’s handheld devices and other systems/equipment, and hire employees who wear the Amazon attire and follow Amazon’s customer service policies. They’re given 5 routes to start, and can work their way up to 20+ delivery routes after 90 days.
According to Amazon’s brochure about the program, entrepreneurs need to:
• Create your business entity and officially become a delivery business owner.
• Order your delivery vehicles, devices, fuel cards, and uniforms through recommended vendors at Amazon-negotiated rates. Obtain motor carrier operating authority for your company and apply for vehicle insurance.
• Set up the services you’ll need for hiring and managing a team of drivers, such as background check, drug testing, payroll, and accounting services. Build your employee handbook, including determining how you will pay drivers and offer health benefits, and consult with legal and other advisors to finalize your plan.
The upside to the entrepreneurs?
A ready-made business model and access to discounts on supplies, fuel, and health insurance, plus the Amazon brand name as a partner. In many ways, it’s similar to a franchise model.
But, to my mind, this program represents a seismic shift for the future of work. We’ve had employers, gig workers, and entrepreneurs (franchise or otherwise). Now, with this one move, Amazon’s leading the way for employers to continue to strategize about offloading one key business/employment issue:
Amazon’s pushing the risk of its delivery initiative on to its entrepreneur partners, and highlighting a very attractive (for employers) model where a company can keep the upside -profits, brand growth, new market expansion, etc. – while transferring the risk to others.
The downside to the entrepreneurs?
- Being locked into a partnership with one supplier (Amazon), whose fortunes could go up or down
- Holding responsibility for an entity that legally carries the risk of all of the delivery vehicles, drivers, etc.
- Signing leases for equipment that can only be used for one purpose
- And – last but not least – holding all of the employment risk (salary/cost of living growth, benefit costs, drug testing, hiring, firing, etc.)
In short, Amazon’s launching a decentralized, distributed employee model whereby people look and act like Amazon employees, but aren’t. This larger business strategy alone isn’t new – companies form holding companies all the time for non-core functions and contract with employment firms for temporary/contract staff. Similarly, the franchise model of employment has existed for eons. However, the potential scale of this initiative eclipses most other attempts to shift the employment burden away from large companies and to smaller employers.
In this case, they’re signaling a future where:
- Entrepreneurs might need to agree to a one-party exclusive partnership
- Workers may find their opportunities with larger companies curtailed and replaced with this distributed model of employment
- These same workers find limited career growth with these small employers and must take charge of their career futures instead of hoping that an Amazon will promote them through the ranks
- More and more employers think through their areas of biggest risk and find ways to pass those along thorough entrepreneur partnerships like this model
In general, it seems that the future workforce is headed toward an increasing divide: those who take on risk (become entrepreneurs/gig workers/small employers) and those who don’t.
Perhaps we should begin teaching risk management in kindergarten?