By Seth Fiegerman 9/29/15
Amazon wants a little of that Uber magic.
Amazon unveiled plans Tuesday to hire hourly contractors in cities around the U.S. who use their own cars and smartphones to fulfill delivery orders quickly for the e-commerce giant, much in the same way that Uber handles orders for rides and meals.
The service, called Amazon Flex, will be part of the company’s premium subscription offering, Amazon Prime, which promises one and two-hour deliveries in select areas. Flex is currently available to subscribers in Seattle and is expected to be made available “soon” in nine more cities, including New York, Chicago and Atlanta.
(FreeBham Editor’s Note: The other cities Amazon has mentioned for rollout of Flex are Baltimore, Miami, Dallas, Austin, Indianapolis and Portland. Due to legal opinions regarding contract employees and their employment status with Uber in California, it is not expected that Amazon Flex will expand to that state in the foreseeable future.)
The move represents a significant financial commitment to Prime, the linchpin of its efforts to hook tens of millions of consumers into buying more items more frequently. It also represents Amazon’s biggest step yet into what is frequently called the “gig economy” or “on demand” marketplace.
Amazon says it will pay workers $18-$25 per hour to make deliveries with promises of a flexible schedule, the same perk touted by a growing number of valuable startups like Uber, Lyft, Postmates and Handy.
This borrows from the strategy du jour to expand the reach and efficiency of Amazon’s already robust logistics operations as it looks to move from delivery times measured in days to hours or even minutes. But it also plunges Amazon into a heated debate over contractor issues.
Uber is currently the target of legal action over its decision to classify drivers as independent contractors, rather than full or part-time employees entitled to basic insurance and overtime benefits. Several startups with similar business models, including Shyp and Instacart, have reacted by reclassifying their employees.
Amazon appears to be unconcerned. “We feel very confident in our approach,” Dave Clark, SVP of worldwide operations at Amazon, told The Wall Street Journal in an interview about the issue.
Amazon has increasingly come to recognize the threat and perhaps opportunity posed by newer delivery options that meet the desire for instant gratification. It has been gradually beenexpanding availability for Prime 1-hour deliveries in key markets and earlier this year partnered with TaskRabbit and others to let Amazon customers book plumbers, electricians and even goat grazers.
Flex’s launch had previously been rumored during the summer.