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Amazon Borrows Walmart’s Script with a Twist

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Amazon looking to speed up last-mile deliveries

Amazon (AMZN) has come up with a new program to provide up to $10,000 to departing employees wishing to start their own package delivery business. Amazon may also continue to pay those former employees for three months to help them transition to self-employment. The program is part of Amazon’s efforts to expand its delivery capacity, reduce its reliance on major delivery companies such as FedEx (FDX) and United Parcel Service (UPS), ship more packages within a shorter period, and save on fulfillment costs. In the first quarter, Amazon’s fulfillment costs rose year-over-year to $8.6 billion from $7.8 billion.

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Delivery speed redefining retail competition

As households shift to purchasing everyday items online daily, the time it takes to receive orders has become a major consideration for consumers, prompting retailers to invest in express delivery systems. In China, Alibaba (BABA) and JD.com (JD) are using drones and robots to ship packages to customers and have opened physical outlets where people can shop and collect their online orders, thereby speeding up order fulfillment.

Walmart’s attempt

Walmart (WMT) also has tried using employees to ship packages to customers. In 2017, Walmart tested store workers delivering online orders to customers on their way back home from work. However, Walmart didn’t go far with the program, shutting it down less than a year after it launched. Amazon appears to have tweaked Walmart’s strategy—we’ll have to wait and see if it works.

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