Dive Brief:

• In Seattle, Amazon is leveraging the on-demand “gig” economy for a new program called Amazon Flex, reports the Wall Street Journal. The news reiterates a story that the retailer was considering a similar program, which the paper broke in June.

• The service, like so many Amazon perks, is limited to Prime customers. It’s unclear where besides Seattle Amazon Flex might operate, though the Wall Street Journal found an indication that the service will be available in Miami as well.

• The move is another way for Amazon to trim costs in the last mile of delivery, an area that is seeing a lot of startups scrambling to deliver goods on the same day they’re ordered.

Dive Insight:

Since its inception, Amazon has consistently seized on ways to combat the advantage that brick-and-mortar retailers enjoy, the largest ones being shoppers’ ability to see and handle products and buy them on the spot.

Although Amazon Flex does little for the “see and handle” part, getting orders to customers within an hour or two does a lot to replicate the instant gratification of buying things in store.

But the gig economy is facing pressure from regulators, which are increasingly scrutinizing how drivers for Uber and other services are treated by the companies that hire them. With this move, Amazon steps right into that controversy.

The California Labor Commission in June, for example, ruled that Uber a driver who filed a complaint over unpaid expenses is an employee and not an independent contractor, and in July the U.S. Labor Department released a rule clarification on when people who work for a company can be classified as employees or as contractors. 

Whenever a company tries to accrue both the benefits of having employees and the benefits of having contractors, while only incurring the costs of one of those, labor regulators will likely take notice.

First-mile delivery startup Shyp said this summer that it will hire its contract workers to part-time or full-time positions, in what it says is an effort to maintain its ability to set the kinds of parameters and expectations a company needs (but can only do with employees, not contractors) to maintain control of its performance and growth. That will add a host of costs, including workers’ compensation insurance, federal withholding for Social Security, benefits, and couriers’ expenses, to the cost of hiring drivers—costs that Shyp says are worth it.

Amazon is reportedly paying drivers up to $20 an hour, with incentives for speedy deliveries.