Amazon.com Inc. (NASDAQ:AMZN) wants to turn the United States consumer into a delivery man, something similar to the business model of Uber. The online retail giant is considering launching a crowdsourced delivery system, which was first reported by the Wall Street Journal.
Amazon ‘On My Way’
In an effort to enhance the shopping experience and curb rising shipping costs, Amazon’s latest ambitious endeavor would see the company embrace an Uber-like courier service using crowdsourced drivers. An unnamed source said the company is calling it “On My Way.”
The online retailer is reportedly developing a mobile app that would pay regular people to drop off packages on their way to other destinations. The fee structure is also being discussed: pay drivers by cash or provide them with credits on its website.
Amazon would hire traditional brick-and-mortar businesses in cities to store these packages – it would rent space or fork over a per-package fee. Both parties would benefit: Amazon has a space and the retailer gains in-store foot traffic.
Amazon, known for its creative delivery services, already maintains a series of lockers in 7-Eleven stores and parking garages.
It remains unclear as to when the service would be launched or even if Amazon will push ahead with the idea. The company has not officially commented on the story.
Shipping Costs Outweigh Fight With Couriers?
This move would make sense for Amazon since it reported $1 billion in net shipping losses in the fourth quarter of last year and the first quarter of this year. Shipping costs soared 31 percent last year, faster than overall revenues.
Also, if such a service is launched, it would pose competition for the likes of FedEx Corporation (NYSE:FDX), United Parcel Service, Inc. (NYSE:UPS) and public mail delivery entities. Akin to Uber’s battle with the taxicab industry, Amazon could be in for an intense fight with the USPS and private mail couriers.
If Amazon does launch On My Way then it would join several other companies that have established a crowdsourced service. Some of these firms include Deliv Inc., Instacart Inc., GrubHub Inc. (NYSE:GRUB) and Google (NASDAQ:GOOGL) Express. In 2013, Wal-Mart Stores Inc. (NYSE:WMT) mulled over a crowdsourced delivery service but quickly shelved the idea.
Recently, Amazon was on the cusp of establishing Rides, an on-demand taxi service similar to Uber or Lyft. However, Rides has been temporarily pushed aside.
We reported last week that Amazon is selling advertising space on its shipping boxes to offset free shipping options and increasing shipping costs.
Amazon Customers May Have Concerns
By now, many Amazon customers may have relationships with FedEx or UPS deliverymen. But won’t they feel uncomfortable having a total stranger deliver a package? That seems to be the concern of many analysts.
From theft to tardiness, there will undoubtedly be an abundance of questions if On My Way comes into existence. What if, instead of delivering a Kindle Fire, the driver simply keeps the package for themselves?
Kim Forrest, a senior equity analyst with the Fort Pitt Capital Group in Pittsburgh, Pennsylvania, told USA Today, “Imagine someone saying, ‘Yes, of course I dropped off your valuable package…'” when it wasn’t really delivered.
These fears may prompt consumers to pay extra for an established courier service to show up at their door instead of a random person.