Amazon is paying small-town florists and funeral homes to deliver packages
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Every morning, a box truck drops up to 120 Amazon packages off at Ed Wojtans house in Houghton Lake, Michigan.
Wojtan loads the packages into his personal truck and delivers them to his neighbors in the remote vacation town about 120 miles north of Lansing. He makes $2.50 per package, delivers an average of 50 a day, and is almost always done by 10 a.m.
A retired county worker who now runs an Airbnb and helps with his neighbors construction business, Wojtan is a participant in Amazons growing Hub Delivery Partner program.
The program is meant to improve the efficiency of Amazons delivery network in rural areas. Rather than pay contractors to drive between far-flung houses and down long country driveways, Amazon instead is using small businesses like auto shops, florists and pizzerias as centralized drop-off points and paying business owners to drive the last mile to deliver those packages.
Over the past five years, Amazon has built a logistics network that rivals UPS, delivering millions of packages throughout the country every day. To do that, it uses a network of third-party contractors that operate out of Amazon-owned delivery stations. But in hard-to-reach rural areas, Amazon has often been forced to rely on competitors like FedEx and the U.S. Postal Service to get packages delivered.
Recently, Amazon has acknowledged that its delivery network grew too fast as online shopping exploded during the coronavirus pandemic, and the Seattle-based online marketplace has begun looking for ways to deliver packages faster, cheaper and more efficiently. The hub delivery program could help Amazon achieve that goal while reducing its reliance on competing delivery services. But the program also allows the corporate giant to shift risk and responsibility onto small businesses, some of which say the deal Amazon is offering isnt as appealing as advertised.
We tapped into local businesses, with a strong understanding of the local roadways and communities, to assist with deliveries, Amazon spokeswoman Maya Vautier said in a statement. The program is successful for Amazon, customers and the local businesses, who are able to treat this as a side hustle to receive incremental income. She said Amazon works with third-party carriers and a network of contractors, and continues to experiment with new delivery models.
Amazon founder and former CEO Jeff Bezos owns The Washington Post.
For Wojtan, 59, being part of the delivery program couldnt have worked out any better. The money he earns from Amazon supplements the income he gets from Airbnb and the pension he has as a government retiree. Plus, the driving keeps him busy.
We do pretty good, he said. I just enjoy working. Im a workaholic.
But not every small-business owner who got the invite from Amazon felt that way. In March, Amazon employees approached Marc Bowker, who owns a comic-book store in Lima, Ohio, offering him and his teenage son $2.50 per package to deliver for Amazon when business was slow at the store.
Bowker immediately shot them down. To me, it doesnt make any sense whatsoever as a business that sells printed books, he said. Why would I sign up to ship Amazon after theyve decimated the small-business landscape?
The compensation is not worth getting into bed with the devil, he continued.
Amazon has been experimenting with the small-business delivery model for years, initially overseas, Vox first reported, bringing hub delivery to the United States in 2020.
The program hasnt been successful for all its participants. One small-business owner, who joined the hub program about a year ago and spoke on the condition of anonymity because theyre still enrolled, said it has been more work and less income than they anticipated.
Rather than the two hours Amazon advertised, this person said it frequently takes four or five hours to complete their assigned route. Driving on gravel roads for several hours a day, seven days a week put so much wear and tear on their vehicle that theyve needed to replace their tires twice this year. As more neighboring businesses have joined the hub program, the number of packages per day has decreased and the routes have become less efficient, cutting into drivers take-home pay.
It needs to be something thats more reliable, the person said. The rural deliveries dont pay enough.
While Amazon is aware of this participants complaints, the company hasnt be able to resolve the routing and distribution issues in a way that satisfies all the local hub partners, the person said. Overall, the person said, the program is not what it was sold as.
Amazons Vautier said route length can vary based on location. Weve heard from hundreds of partners that they love this program, and while partner experiences are going to vary based on location, we appreciate their feedback so we can build the best possible experience for them and our customers, she said. Partners can notify Amazon at any time if they would like to opt out of Amazon Hub Delivery.
The e-commerce giants existing delivery network allows it to maintain control over its business while passing liability for car accidents or employment issues onto its contractors. It also uses gig-economy-style Amazon Flex workers in some areas who deliver packages in their personal cars. Participants in the hub delivery program have to use their own business license and insurance, which allows Amazon to avoid some overhead costs and legal headaches.
Its transferring all the risk and liability to these small businesses, said Veena Dubal, a professor at University of California College of the Law, San Francisco. All the fluctuating risks of employment, car expenses, gas and accidents are on the small business.
To find participants as the hub delivery program expands, Amazon hired field reps and joined chambers of commerce across the country. One Amazon employee working on the program, Abbey Keane, described it in a LinkedIn post as a new program that partners with small businesses and farm entities to deliver Amazon packages in rural areas.
Amazon Field Acquisition Manager Todd Ghys, who is working on expanding the hub program in Missouri, said in a LinkedIn post that the program will make a difference in local, rural communities.
Amazon supports small business, Ghys told the Chamber of Commerce in Marshall, Mo. Amazon itself is the ultimate small-business story, as it started by selling books out of a garage. We want folks to buy local first. If they cant, then buy from Amazon.
Amazon has hosted hub events for small-business owners in towns like Marshall; Panama City, Fla.; Grayling, Mich.; and Sioux Falls, S.D. It is operating in 12 states, including Alabama, Michigan, Arkansas, Mississippi, Minnesota, Oklahoma and Nebraska. According to its website, it also wants small businesses to deliver packages in Manhattan. To join the program, businesses must pass a screening, hold the appropriate business license and insurance, and be available seven days a week.
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