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ANALYSIS How will the launch of Amazon Flex change retail?

It’s being hailed as the Uber of the retail logistics world. But what are the implications of the launch of Amazon Flex for retail?

Amazon’s [IRDX RAMZ] delivery strategy has been clear in recent years. It’s to become ever faster and more convenient for the customers. In so doing, it hopes those customers will only turn to it when they want to buy… well, pretty much anything.

With its latest move, the launch of Amazon Flex, the retailer now aims to cut delivery times still further. The new service, now operating in Birmingham and set to come to other cities in future, means that anyone with a valid driving licence and appropriate insurance can sign up to deliver its parcels, following a criminal record check. The move does away with the concept of taking on staff, instead enabling ‘delivery partners’ to turn their free time into extra income – earnings are put at between £13 and £15 an hour, including tips. The retailer emphasises that work allocations, through delivery blocks that can total up to 24 hours a week, may change from week to week and are not guaranteed. Indeed, they’re allocated randomly.

Amazon makes it clear that for those who would like a full-time job, the opportunity to become a delivery driver for Amazon is still there. It says in a blogpost: “At Amazon, we believe that the most meaningful inventions are the ones that empower others. We love it when we find a new way to better serve customers and create opportunities for small businesses, entrepreneurs and individuals.”

It’s an approach that while similar to that of Uber, which has enabled drivers to turn their cars into taxis, is a world away from more traditional retailers. Many of them have taken delivery further in-house in recent years in order to retain as much control as possible and ensure the final mile of delivery is done as well as possible.

Amazon is instead outsourcing to anyone who wants to do the job. That sounds fine – as long as it works. But customers expecting the fast and convenient delivery that Amazon promises may rebel if parcels are late or lost – and that seems inevitable. And that’s before any question of fraud – the fastest growing type of crime, according to this week’s ONS Crime Survey of England & Wales – comes into play. Maybe individual failures simply won’t matter when millions take place successfully. Or maybe those tips won’t be as forthcoming as Amazon predicts, especially since there is currently no culture of tipping the delivery driver in the UK. For many shoppers, especially Prime customers, free delivery is the point of buying from Amazon, and offering a tip is simply not on the radar.

The upsides for Amazon are clear. There’s no work in hiring and firing, no contract to be negotiated with delivery companies, all of which will keep costs to a minimum. But this comes in the week that one delivery company has been in the headlines for allegedly offering delivery rounds that pay less than the living wage. It’s not necessarily a fast route to customer satisfaction.

That’s something other retailers will bear in mind as they consider their own delivery strategies.

Mark Denton, head of retail propositions at BT Expedite [IRDX VBTE] predicts that traders will be watching with interest to see how this works out. “Customer’s don’t see the difference between the retailer and the delivery logistics,” he said. “Until the package is in the customer’s hands, the brand is still being represented. With this new way of delivering Amazon is effectively entrusting their brand in anyone who wants to help.

“The last mile is perhaps the most crucial part of the online experience, I’m sure many retailers will be watching with interest and debating whether crowd-sourcing is going to be the key to competing with Amazon.”

Courier company ParcelHero, by contrast, predicts that Amazon Flex will give shoppers more choices, including swifter delivery times. Head of PR David Jinks said: “Crowdsourcing and the so-called gig economy are ideally suited to local deliveries and it’s a certainty Amazon won’t be the only big name to turn its own customers into delivery drivers.”

If it does take off, the most likely way that Amazon Flex will change retail is in changing customer expectations. If shoppers get used to the super speedy delivery that the service promises, they’ll soon come to expect that from all retailers. And that’s by no means a first for Amazon, which has over the years helped to shape all our expectations of online shopping.

Mentioned in this piece…

Amazon

Amazon

IRDX: RAMZ

Amazon is a market-leading eTailer with global reach and a broad array of product types. (more…)

BT Expedite

BT Expedite

IRDX: VBTE

We provide retail solutions. We combine technology with best practice and will take care of everything from planning and implementation to staff training and ongoing maintenance. Everything we do is focused on exceeding the expectation of your customers. Our solutions are behind some of the largest, busiest and most successful retail organisations in the UK. (more…)

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