Amazon is buying 20,000 vans to help people start delivery businesses in the US

A worker passes a line of Amazon delivery trucks in the US. Picture: Getty Images
  • Amazon announced on Wednesday that it would acquire 20,000 new Mercedes-Benz Sprinter vans for use in its new delivery program.
  • The program, announced earlier this year, is designed to lessen the company’s reliance on delivery mainstays like FedEx, UPS, and the US Postal Service.
  • The 20,000 new vans are a major investment in the new program, but that number is still dwarfed by the vehicles in delivery fleets of competitors.

Amazon is going all in on its new delivery program.

The retailer announced on Wednesday that it would acquire 20,000 Mercedes-Benz Sprinter vans to use in its new homegrown delivery initiative, in which it says it will pay entrepreneurs to start small businesses to deliver its packages.

Amazon announced the program in June, promising $US300,000 in annual profits for entrepreneurs willing to start companies and hire up to 100 drivers for a fleet of up to 40 delivery vehicles. The new vans will not be owned and managed by Amazon but by a fleet-vehicle company that will in turn lease to the new delivery companies.

The vans will, however, be emblazoned with Amazon’s branding and blue Prime logo.

The new purchase is part of the retailer’s plan to rely less on package-delivery incumbents like UPS, FedEx, and the US Postal Service by helping to fund small businesses. The number of vans in the order is still much lower than the number of vehicles in fleets operated by UPS, which says it has about 119,000 vehicles worldwide, and FedEx, which says it has more than 100,000 FedEx Express vehicles and more than 60,000 FedEx Ground vehicles.

An Amazon representative told The Wall Street Journal the company had received “tens of thousands” of applications for the new program, though is likely to select about 500 to start.

Dave Clark, Amazon’s senior vice president of worldwide operations, said in a joint statement with Mercedes-Benz that the 20,000-vehicle order represented an increase over its original order due to the “the tremendous response.”

Amazon already works with hundreds of third-party logistics companies to help deliver its packages quickly as part of its Prime delivery promise. The new vans are a major step in the direction of Amazon’s creating its own delivery network and becoming less reliant on other delivery companies.

Amazon’s ballooning shipping costs are a good reason for it to try to exert more control over one of the most important parts of its business. Those costs nearly doubled in two years, to $US21.7 billion last year from $US11.5 billion in 2015, the company said in a 10-K filing with the Securities and Exchange Commission earlier this year.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.