Fusing the Gig-Economy and Last-Mile Delivery: A Case for an Amazon-Uber Partnership

Innovation has been the cornerstone of Amazon’s business strategy and rise to success. After positioning itself as close as possible to the customer and facing new challenges with its logistics providers, Amazon has desperately tried to inhouse last-mile delivery as it slowly matures its shipping fleet. In response to the faster delivery promises that it made to its customers, Amazon developed two gig-economy-inspired business ventures, AmazonFlex and Delivery Businesses Partners, to satisfy growing demand in the short run and stunt rising shipping costs. However, in its attempt to regain control of its last-mile, Amazon undervalued the administrative burden needed to manage its contractors: chiefly to process packages quickly and maintain customer satisfaction. It also has not released AmazonFlex nationwide, as its platform is not robust enough to handle all the traffic generated by matching transactions or offer any data about the individualities of each delivery (building type, building access, safe parking, etc.). Even though Amazon Flex resembles the UberEats platform, Amazon does not capture customer responses on last-mile delivery specifically. It therefore has no way of gauging whether this gig-economy solution can offer the same on time delivery targets and equal care in package handling as seasoned carriers.

This paper analyzes why Amazon can further deploy its last mile by partnering with Uber for the short term. By utilizing Uber’s large transactional repository and subject matter expertise on meal delivery, Amazon can refine its short-term solutions, limit inherent risks, and maintain customer satisfaction. Uber stands to profit from the partnership by locking in the necessary demand volume to become profitable, while limiting its marketing expenses and lowering the cost per mile traveled. Uber Drivers will have more “jobs” available to remain logged into Uber’s platform and have the ability to execute multiple deliveries in parallel while having to drive less miles. Amazon already has the necessary physical infrastructure to dispatch packages and would barely need to adjust current operations, considering that all last-mile deliveries are executed by contractors in vans and standard sedans. Likewise, Uber would adapt quickly since its service-level monitoring of over 200,000 restaurants would be reduced to only one stakeholder and routes would often originate at the same point. Lastly, Amazon will not have to continue investing in additional equipment, as drivers will drive their own cars and utilize the Uber platform and its refined safety features.

The arrangement of this thesis is as follows: Chapter 1 will provide background information and list the complexities of last mile delivery. Chapter 2, Amazon’s Competitive Environment, will investigate Amazon’s external risks from a competitive analysis standpoint. Chapter 3 will cover how Amazon has leveraged the gig-economy to deliver its last-mile. Chapter 4 will dive into Uber’s threats and weak financial standing. Finally, Chapter 5 will conclude with the incentives and success metrics that support the proposed partnership.