Amazon is recruiting a small army of delivery drivers in a direct challenge to Royal Mail.
The internet shopping giant is urging entrepreneurs across the UK to set up businesses for as little as £10,000 as part of a major scheme to bring more of its operations in-house.
And as ‘delivery service partners’, Amazon will guarantee them work from its vast network.
Amazon’s logistics arm handles around 260m packages a year, but uses Royal Mail and its rivals to complete the final part of the journey to a customer’s front door.
Royal Mail is already under enormous pressure from low-cost rivals and years of rows with unions over pay and conditions. The listed company has seen £4.2 billion wiped off its value in the past 18 months – or two-thirds – as its share price plunged.
As part of Amazon’s scheme, drivers wear branded uniforms and their vans are emblazoned with the company’s logos, but the businesses are owned by the entrepreneurs, with Amazon contracting them to carry out deliveries.
The UK parcels market is now estimated to be worth more than £12 billion a year. Katie Cousins, an analyst at Shore Capital, said: ‘It was always inevitable that Amazon would start to expand its logistics operations, because to them it is low-cost but offers even bigger potential revenues. That is clearly a threat to Royal Mail and the rest of the delivery industry.’
In a brochure, the tech giant claims a partner with a fleet of 20 to 40 vans can rake in annual revenues of as much as £1.8m and profits of £150,000. Amazon will also help them negotiate lower costs for equipment, with start-up fees falling as low as £10,000
The cost of Amazon’s efforts to offer faster deliveries, including its programme to roll out one-day orders in the US, is expected to balloon to almost £1.2 billion in the fourth quarter. The period includes Black Friday and Christmas, with the firm forecasting bumper sales of between £62.3 billion and £67.3 billion.
It comes as Royal Mail is facing strike action over the crucial festive period, which could become the first national postal strike in a decade, while it is being undercut by delivery rivals such as Yodel and Hermes.
Jeff Bezos, Amazon’s founder and the world’s richest man, has personally attacked Royal Mail in the past, claiming it could not cope with the demand his firm was creating.
Although ploughing cash into its logistics operations has dented Amazon’s profits, Bezos has been unapologetic to investors, saying that customers ‘love’ faster deliveries. ‘It’s a big investment, and it’s the right long-term decision,’ he told them last week.
However , the Communication Workers Union, which represents postal workers, said: ‘The attempt by Amazon to replace well-paid, unionised Royal Mail jobs with the insecure employment model they promote is yet another example of why the dispute between the CWU and Royal Mail is so important.’
Amazon declined to comment.