Bells ring­ing

Ama­zon faces ques­tions over de­liv­ery driver scan­dal

The Daily Telegraph - Business - - Front Page - ASH­LEY ARM­STRONG

Af­jal Gori’s eyes filled with tears as he talked about hav­ing to choose whether to eat that night or fill his de­liv­ery van with petrol. The driver had just been docked an­other £100 by his em­ploy­ers at SEP Lo­gis­tics for mak­ing an Ama­zon de­liv­ery three min­utes be­fore the sched­uled time.

As a re­sult of the hefty fine he would be tak­ing home just £46 for a 10-hour shift. He would have to work for even longer that week to make up the money he thought he would be re­ceiv­ing be­fore the puni­tive penal­ties. “I am be­com­ing so de­pressed about it,” he said. “It’s ex­ploita­tion.”

The Sun­day Tele­graph re­vealed this week­end that SEP Lo­gis­tics, which de­liv­ers Ama­zon’s Fresh and Prime Now goods across Lon­don, had been run­ning a puni­tive regime that left many drivers earn­ing less than the min­i­mum wage.

As well as fin­ing drivers £100 for “early” de­liv­er­ies, the com­pany also levied charges in­clud­ing £25 if drivers made a de­liv­ery two min­utes out­side a win­dow and £25 for a “no-show”. Work­ers had to cover the costs of van rental, petrol re­fu­elling and ve­hi­cle in­surance. This meant that al­though drivers could, in the­ory, earn £12-an­hour with SEP Lo­gis­tics, they of­ten made well be­low that be­cause of the ex­ces­sive charges.

The harsh fines were cou­pled with a bru­tal work­ing cul­ture that re­sulted in drivers at SEP Lo­gis­tics be­ing ver­bally abused if they missed their de­liv­ery dead­lines be­cause of traf­fic or were re­spond­ing to a cus­tomer re­quest. One mes­sage to Mr Gori, seen by The

Tele­graph, read: “You are an id­iot … U (sic) have just done an early de­liv­ery and that means £100 fine.”

When The Tele­graph showed Ama­zon the ev­i­dence of the fines, the on­line gi­ant acted quickly. Within 24 hours of threat­en­ing SEP with ter­mi­nat­ing its con­tract, SEP had pledged to end the “flawed” pol­icy and re­fund drivers all his­tor­i­cal fines. How­ever, the in­ves­ti­ga­tion has raised fur­ther ques­tions about Ama­zon’s busi­ness model and why the $542bn (£413bn) com­pany is re­ly­ing on out­sourc­ing de­liv­er­ies to small lo­gis­tics com­pa­nies rather than build­ing its own fleet of vans and grow­ing staff. “If I was a bil­lion­aire like Jeff Be­zos, why would I take the risk?” asks one ri­val re­tail boss.

Ama­zon com­mented that it reg­u­larly au­dits all its third party firms and says that it “re­quires all de­liv­ery com­pa­nies work­ing on our be­half to meet our sup­plier code of con­duct re­quir­ing a re­spect­ful work en­vi­ron­ment and com­pet­i­tive pay”.

Ama­zon also says that the de­ci­sion to out­source to smaller de­liv­ery com­pa­nies was a re­sult of want­ing to be able to de­liver goods on Sun­days. It then asked them to make same-day de­liv­er­ies. But an­a­lysts have ar­gued that, de­spite Ama­zon’s fa­mously am­biva­lent ap­proach to mak­ing a profit, the de­ci­sion to out­source to smaller firms is driven by cost.

By con­trast, UK su­per­mar­kets that com­pete with Ama­zon’s Fresh ser­vice – in­clud­ing Ocado, Tesco, Sains­bury’s and Asda – have fleets of vans and all em­ploy their own drivers, pay­ing £7.50 an hour ac­cord­ing to the new liv­ing wage. The grow­ing threat of Ama­zon has also changed the dy­nam­ics of the in­dus­try, re­sult­ing in them slash­ing jobs to com­pete.

Mean­while, Ama­zon reg­u­larly is­sues press re­leases cel­e­brat­ing the cre­ation of jobs at its ware­houses and of­fices. What is less clear is how many sub­con­tracted work­ers it re­lies on to sup­port its growth.

“Ama­zon has been se­duced into keep­ing up its level of growth at a time when its in­fra­struc­ture hasn’t caught up,” says Richard Hy­man, an in­de­pen­dent re­tail an­a­lyst. “So they are look­ing for the short­est way to main­tain growth.

“The real­ity is that Ama­zon does this by cut­ting cor­ners and do­ing brand dam­ag­ing things, like sub­con­tract­ing, but it is an un­stop­pable force.”

Ama­zon has been keen to dis­tance it­self from the treat­ment of de­liv­ery drivers, em­pha­sis­ing that they were em­ploy­ees of SEP – a third party – not Ama­zon work­ers. How­ever, Hy­man says this is an at­tempt by Ama­zon to “have its cake and eat it”.

For ex­am­ple, when Ama­zon launched of Ama­zonFresh UK last year, the 735-word press re­lease about the one-hour and same-day speedy ser­vice didn’t men­tion of the use of third party providers, de­spite “fast de­liv­ery op­tions” be­ing lauded as the key ben­e­fit.

“Sub­con­tract­ing the re­la­tion­ship with the cus­tomer is dic­ing with death,” says Hy­man. “The cus­tomer doesn’t care that it’s a mid­dle­man bring­ing their Ama­zon goods to the door, as far as they are con­cerned they are buy­ing from Ama­zon.”

The ris­ing trend of big busi­nesses out­sourc­ing de­liv­er­ies and the treat­ment of work­ers in the grow­ing gig-econ­omy has al­ready led to the Gov­ern­ment’s Taylor Re­view.

“Ex­ploit­ing work­ers can­not be a com­pet­i­tive ad­van­tage,” says Frank Field, chair­man of the Com­mons work and pen­sions com­mit­tee.

Asked about the treat­ment of de­liv­ery drivers for Ama­zon ser­vices, Diane Ni­col, a lawyer at Pin­sent Ma­sons, says: “What Taylor wants to achieve is fair and de­cent work and it ap­pears this is not an ex­am­ple of work that is fair and de­cent.”

Ama­zon has re­cently in­tro­duced a “Flex” de­liv­ery, sup­ported by free­lance, self-em­ployed drivers. Ac­cord­ing to Ama­zon the job “is a great op­por­tu­nity to be your own boss”. Lon­don buses are also be­ing mooted as a way to trans­port parcels around the city, partly driven by the growth of Ama­zon.

The move ce­ments the on­line gi­ant’s use of sub­con­tract­ing, sug­gest­ing that for all its bil­lions of dol­lars Ama­zon is not pre­pared to pay for its own fleet of vans any time soon.

An em­ployee of Ama­zon in its ware­house in Peter­bor­ough. The com­pany’s con­trac­tors face crit­i­cism over their em­ploy­ment prac­tices

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