Amazon, Kia end same-day delivery trial program

Amazon is ending its trial program that used rented Kia Soul vehicles for same-day deliveries.

The program began in 2023 and involved contract delivery firms using the hatchbacks for short shifts.

After over a year of feedback from customers, contract partners, and internal teams, Amazon decided to discontinue the program. The rental vehicles will be returned to suppliers.

Delivery Service Partners (DSPs), who operate Amazon-branded vans, will see the program phased out in the coming months.

Amazon said it will help DSP drivers find alternative roles if needed.

Flex drivers, gig workers who use their own vehicles and opt in via an app, will now handle these delivery routes.

The program had been tested in Florida, Illinois, and Texas but didn’t meet same-day delivery demands.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Amazon’s strategic pivot reveals the economic realities of last-mile delivery models

This shift from DSP-operated Kia Souls to gig workers highlights the continuing cost challenges in last-mile delivery experimentation.

Amazon’s fulfillment costs have risen dramatically over time, increasing from $11.5 billion to $21.7 billion between 2015 and 2017, representing 14.2% of net sales 1.

The company has been pursuing various delivery methods since introducing “Local Express Delivery” in 2009, consistently adapting its approach based on operational efficiency and cost optimization 2.

This pattern of testing and pivoting is typical of Amazon’s logistics strategy, which has evolved from relying on established carriers to building a complex network of fulfillment options, including both employee-based and gig-economy models.

The termination of the Kia Soul program after just two years suggests that despite initial optimism, the economics of dedicated same-day delivery vehicles with contracted partners couldn’t match the flexibility and cost structure of the Flex program.