Attention Main Street businesses: Amazon wants you.
One Amazon‘s latest growth plans include hiring 2,500 small businesses in 23 states to help deliver packages. The initiative, called “Amazon Hub Delivery,” can help Main Street businesses — such as florists, coffee shops, hair salons and gas stations — generate up to $27,000 a year in additional revenue, according to Amazon.
In some ways, the Hub Delivery app is similar to Amazon Flex, which debuted a few years ago and offered everyday Joes the option to use their own car to deliver packages for the company. According to Amazon, this initiative is now in more than 100 cities and towns in the United States. The new program is currently open for business 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 more states and cities in the future.
The new delivery partnership model could prove viable for Amazon due to the potential for faster delivery and higher customer satisfaction. Shanton Wilcox, partner at PA Consulting, a strategy and operations firm, said there is also an opportunity for businesses that choose to participate to expand and grow through an additional source of income. But businesses also need to understand the potential costs of the commitment.
“It’s not a random decision that the company’s delivery van is parked and unused 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:
This isn’t just for existing Amazon sellers
Amazon seeks to partner with all types of businesses that have the ability to deliver packages on behalf of the company. Amazon Hub Delivery partners selected through the app receive packages every morning and have the flexibility to make deliveries every day at their convenience, using available staff if they wish.
According to Amazon, businesses deliver 20 to 50 packages per day, with an average of 30. Deliveries are made seven days a week, except for five major holidays. The program is available in super rural areas and dense urban areas like New York City and college towns. According to Amazon on its website, delivery experience is not required and there is no long-term contract. Amazon says it will provide training and guide businesses through the process.
Small businesses must meet a number of criteria
The program only works if a small business meets Amazon’s criteria. First, there must be a safe place to store the packages. Small business entities interested in applying should also have copies of relevant documents such as a state business registration number, sales tax permit or registration or tax identification number.
They must also have the ability to fulfill Amazon’s delivery obligations. Even businesses that are not open seven days can qualify as long as they receive and deliver Amazon packages on all required days.
Associates and drivers must pass a criminal history and vehicle registration check, an OSHA background check, and a Department of Labor registration check, if applicable. They must also carry appropriate insurance. This means general liability insurance and workers compensation if required. Businesses can learn more about insurance requirements by watching the webinar.
The economics of being an Amazon delivery partner
Becoming a delivery partner isn’t something that’s attractive or feasible for every small business, but those interested should ask a series of questions to see if it’s something worth pursuing, said Santosh Sankar, co-founder and managing partner. at Dynamo Ventures in Chattanooga, Tenn., which invests in early-stage supply chain startups.
Businesses need to do the math to see if a partnership makes sense for them, Sankar said. Amazon hasn’t said exactly how much it pays per package; but based on the estimated annual profit of $27,000, assuming 30 packages per day for 360 days, the rate would be $2.50 per package. In this scenario, a business can earn $75 per day.
The question then becomes whether existing personnel can be used for the new job or whether additional capacity, labor and equipment costs are required. For example, if a business is already paying a high school or college student $15 an hour and the employee has the ability to work an extra three hours and an available delivery vehicle, this may make sense. At this rate, it may even be profitable to hire additional staff, Sankar said. However, if the business needs to purchase a company car for delivery or make major repairs to create a safe space, it may not be worth the extra investment.
Businesses should also consider what the long-term growth potential might be. “It’s not just about fulfilling your existing capacity. It’s the potential for expansion that many businesses are looking for, but it has to be part of the decision-making process,” Wilcox said.
Where to go for 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 6 in California. Owners can contact Amazon directly to schedule an in-person appointment.