Amazon has taken the next step in building out its own shipping network by expanding its Amazon Flex delivery program to include standard Amazon.com packages, according to a report from Reuters today. Amazon launched Flex last fall to let part-time drivers earn cash for delivering packages for Prime Now, Amazon's same-day delivery service available in select US cities and other metropolitan areas around the world. The Seattle-based e-commerce giant is now asking some Flex drivers in Texas to deliver packages that would normally be handled by UPS or FedEx, the report states.
The retailer has hinted at building its own delivery network for quite some time. Beyond Prime Air, its ambitious drone delivery program, Amazon has been quietly buying up thousands of truck trailers to better support shipping between its fulfillment centers and looking into leasing its own fleet of Boeing jets. Shipping costs are one of Amazon's biggest drags on profit, costing the company $11.5 billion last year, an increase of 18 percent over 2014.
Amazon may be looking to build an international shipping business
Amazon Flex drivers make between $18 and $25 per hour and, like those working for Uber and Lyft, are not considered employees. Until now, those drivers were only able to deliver Prime Now products, which represent a small fraction of the more than 200 million listings on Amazon.com. So the expansion to include standard deliveries should provide drivers more hours, however Amazon says it will not let drivers deliver for both Amazon.com and Prime Now simultaneously until later this year. Amazon confirmed to Reuters that some Flex drivers have switched to delivering standard packages in Texas, saying the company will "explore new ways to provide customers with faster service and delivery partners with more opportunities."
The company has shied away from saying outright that it plans to replace its shipping partners, choosing instead to frame its own delivery network as a complementary service for high-peak times and hard-to-reach rural areas. However, a report from Bloomberg earlier this month, citing internal company documents, outlined Amazon's far grander plans to turn shipping and logistics into a core business operation. The plans reportedly include a way for third-party companies to hail Amazon trucks via an app, including in locales like China and India, to ferry products between ports, warehouses, and other businesses. The initiative, called "Global Supply Chain by Amazon," indicates more serious plans to compete with companies like FedEx and UPS.