Amazon.com Inc (NASDAQ:AMZN) said on September 21 that it will invest $1.9 billion in its Delivery Service Partner program in 2027. Much of that goes to driver pay. The announcement came at Ignite Live, the company’s annual conference in Las Vegas for the small businesses that run its delivery routes.
Amazon said the money supports lifting driver pay to a national average of close to $24 an hour. It described that pay level as 16% higher than three years ago. The company has now put $21.7 billion into the program across its eight-year history.
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Owning the Last Mile is What Rivals Cannot Rent:
Amazon built this network because nobody else would deliver on its terms. That decision is a large part of why same-day delivery works, and it is the piece a competitor cannot simply rent.
Delivery is a labor market before it is a logistics problem. Drivers have other options when the pay gap narrows, and turnover is expensive on a route that depends on knowing it well.
The safety numbers are the quiet part of the case. Amazon said serious vehicle crashes across the network fell more than 23% last year, over a period in which it has spent heavily on safety. Fewer crashes should in time mean lower insurance costs and fewer damaged vans.
The technology is starting to do real work as well. Amazon expects more than 20,000 of its AI Smart Delivery Glasses in the field by the end of 2027. The glasses show navigation and delivery details without a driver reaching for a phone. Behind them sits a mapping effort that has logged where to park and how to reach the door at addresses across the network.
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A Recurring Cost in the Thinnest Part of the Business:
If the glasses and the mapping work as intended, they should eventually reduce the cost of each delivery. So far the spending is going up rather than down, and Amazon has not said when the technology starts paying for itself.
None of this is a one-off either. Amazon has committed another full year of spending on top of everything already put in, and pay rises do not reverse. Every future year now starts from a higher base.
It also lands in the lowest-margin activity Amazon has. Retail fulfillment has never earned what advertising or cloud computing earn, and the last mile is the most expensive stretch of it. The company is raising the cost of the part of the business least able to absorb it.
Amazon is also committing enormous sums to AI infrastructure. A recurring delivery bill arriving in the middle of that build-out leaves less slack if consumer spending softens.
Conclusion:
Amazon is reinforcing the delivery network that makes its retail promise possible. It is paying more to hold drivers, crash rates are improving, and its AI tools should eventually lower the cost of each stop. However, this is a recurring commitment in Amazon’s thinnest-margin activity, arriving while capital is already stretched by AI infrastructure. The number to watch is whether cost to serve per package starts falling as the glasses and mapping scale. If the spending keeps rising without that, the last mile becomes a permanent drag rather than a moat.
Market Sentiment:
Amazon.com Inc was held by 369 hedge funds with a combined stake value of about $97.1 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 353 hedge fund holders with a cumulative investment value of around $77.6 billion in the previous quarter.
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This article is originally published at Insider Monkey.
