The Amazon Delivery Service Partners Program was launched just two weeks ago after undergoing five months of beta testing with its first batch of approved partners. Amazon Delivery Service Partners is part of a plan to cover the marketplace’s last mile delivery problem. Anyone, with or without prior delivery service experience, can apply to open a small-scale delivery service for Amazon.
What’s Behind Amazon’s Program
Last Mile Problem
Amazon has always struggled with last mile delivery, and the problem has only grown since the marketplace decided to get into fresh foods. Amazon Delivery Service Partners is their latest attempt to solve the problem. They launched a similar program called Flex in late September of 2015, only Flex operates more like Uber for Amazon. The Amazon Delivery Service Partners Program has a more stable structure.
The goal is to make sure that Amazon’s demanding customers get their orders fast. Last mile delivery is expensive, and current partners like UPS and FedEx don’t seem to be the best options. USPS offers more reasonable charges, but delivery delays have hurt Amazon’s two-day delivery promise.
Amazon Delivery Service Partners will be more under the company’s control, supplementing its own network of over seven thousand trucks and planes.
Amazon is confident that Amazon Delivery Service Partners will be a financially stable supplement. Amazon sales are always on the rise, and Prime memberships are increasing as well. The company’s core logistics providers just can’t keep up. eMarketer says that Amazon will capture almost 50% of all eCommerce sales this year. They are happy working with their current external partners, but realize the risks involved when dealing with providers who aren’t under their control.
Amazon’s shipping costs almost doubled between 2015 and 2017, and they of course expect costs to keep increasing. It doesn’t help that there’s a trucker shortage, which adds to the problem. Amazon created Delivery Service Partners as a way to leverage both their own network and additional third party providers to better control costs, as well as customer service. Amazon has no comment for how long it will take to build out this program, or how many new delivery stations they will build, but they anticipate the opportunity for tens of thousands of drivers under hundreds of small delivery businesses to be added.
How Delivery Service Partners Works
The Amazon Delivery Service Partners Program allows business owners to operate up to 40 vans delivering for Amazon. The vans will be leased from Amazon and carry the Amazon Prime logo. Drivers will be hired by the business owners, but must wear blue, collared Amazon-branded uniform shirts with black caps.
Business owners will hold control over operations, but will be barred from servicing the competition. Vans will start at Amazon delivery stations – currently numbering under a hundred – and spend the day delivering packages to various homes. Amazon is still working with its other partners, and has an algorithm that will determine which packages go to these new Delivery Service Partners.
The Amazon Delivery Service Partners Program currently has an open application process. This just goes to show how much the marketplace is struggling to cover the last mile. But Amazon is firm about maintaining control, and will pre-vet all applicants and provide three weeks of hands-on training.
Amazon is looking for passionate team leaders and has four initial requirements – experience building great teams, commitment to a full-time Delivery Service Partners contract, and at least $30,000 in liquid assets, strong credit history. Plus, applicants who have owned a business previously will be preferred.
After creating a Delivery Service Partners account, Amazon asks a few more questions about experience and finances. If you get past this, you will fill out a longer application form, which then can take up to six months to be reviewed. Once that’s done, you can begin training and hiring drivers.
Amazon provides a brochure that contains all the information you need to know about what to prepare. This includes purchasing handheld devices, car insurance and fuel cards on top of getting your vans, uniforms and drivers. Amazon says that you can start with as little as $10,000 – if you make use of the various deals that they offer on some of the above. Amazon also says that Delivery Service Partners stand to make as much as $300,000 a year if they operate at capacity. This, of course, depends greatly on what city they are servicing, their business costs, and how much business Amazon actually gives them.
A Word of Warning
Amazon is a powerful brand, and being backed by that name is a huge advantage for any business. You don’t need to build your own brand, for starters. But remember that Amazon means to maintain control over its Delivery Service Partners Program. This means that like any Amazon seller, after being allowed into the program, Delivery Service Partners will be expected to comply with a long list of regulations and fine print. And being tied to Amazon exclusively means that you will be limited by them in terms of scaling your business.