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Amazon Is Using Gig Economy Drivers to Deliver From Malls

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(Bloomberg) -- Amazon.com Inc. is testing a service that uses the company’s sprawling network of gig drivers to fetch packages from mall-based retailers and deliver them to customers.

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The program, should it become a permanent part of the e-commerce giant’s delivery options, could help Amazon expand the variety of goods it has available for fast shipment. Shoppers who want same-day or quicker shipping could be shown products stocked by a local mall store. They order the item from the retailer on Amazon.com, and one of the Seattle-based company’s contract drivers delivers it.

The service was up and running by last year and relies on Amazon Flex drivers, who use their own vehicles to deliver packages. The geographic range of the pilot is unclear, but communications with drivers reviewed by Bloomberg reference malls with participating retailers in Chandler, Arizona, Las Vegas, Nevada, and Tysons Corner, Virginia.

Amazon spokesperson Lauren Samaha said a “handful” of the company’s existing partner retailers are participating in the program but declined to name them or reveal how much the service would cost customers or stores. She noted that retailers have offered their products for delivery on Amazon for years.

“This is just another way we are able to connect Amazon sellers with customers via convenient delivery options,” she said in an emailed statement.

The initiative could escalate the already fierce competition between established retailers and startups working to rapidly deliver goods ordered online, often using the services of contract drivers. Instacart Inc. is broadening its offerings beyond groceries, DoorDash Inc. handles some deliveries for retailers like Macy’s Inc. Other Amazon rivals like Walmart Inc. and Target Corp. use gig-economy drivers to deliver some items from their shelves.

Under the new initiative, drivers stop at shopping centers instead of Amazon delivery stations. It’s the latest twist in the Amazon’s complicated relationship with American malls, which are struggling to remain relevant as shoppers stampede online.

Amazon already stocks its own urban warehouses with goods from select third-party retailers designated for speedy delivery. The company has also experimented with delivering items stored in partners’ warehouses.

Amazon last year began recruiting mom-and-pop shops, including florists and IT shops, in rural parts of the U.S. to deliver packages, Vox reported this month. The company also recently began offering to fulfill orders offered for sale on select retailers’ own websites, an initiative Amazon calls“Buy With Prime.”

Amazon had historically relied on third parties like the US Postal Service and United Parcel Service Inc. for “last mile” trips from its warehouses to shoppers’ homes. The company started building its own delivery capacity with Flex, which launched in 2015. Four years later Amazon started the Delivery Service Partner program, which relies on contractors to deliver packages in blue Prime-branded vans. Today, Amazon handles most of its own deliveries in the US.

Building its own logistics operation helped supercharge Amazon’s growth but came at a cost. The company last month reported its first quarterly loss in seven years as shoppers return to their pre-pandemic habits and acknowledged it now has too many people and an excess of warehouse space. Delivering from other retailers’ stores, if it catches on, could mean Amazon has to build fewer expensive, urban depots.

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