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News - June 29, 2018

Amazon encourages entrepreneurs to get in the delivery business

On Thursday, Amazon launched its Delivery Service Partner (DSP) program, which will encourage entrepreneurs to start small Amazon delivery companies. Each entrepreneur will oversee 40 to 100 employees who will use 20 to 40 Amazon-branded vans to deliver packages year-round, using Amazon’s own logistics systems to facilitate the process. Start-up costs for a DSP business are as low as $10,000, and military veterans can apply to have their start-up costs reimbursed. Amazon claims DSP companies can produce annual profits as high as $300,000.

According to The Wall Street Journal sources Amazon project such growth in deliveries that its usual partners, UPS, FedEx, and the U.S. Postal Service won’t be able to handle it.

Amazon is encouraging entrepreneurs to work with the e-retailer with an investment as low as $10,000.

Amazon thinks that it’s an especially good opportunity for military veterans—and to encourage qualifying vets to take up the challenge, it’s setting aside $1 million so it can give them $10,000 apiece to cover startup costs.

Once a Delivery Service Partner is up and running, Amazon will provide not only stuff to deliver but also the back-end infrastructure needed to manage it; assistance with issues such as training, taxes, and payroll processing; and discounts on insurance, fuel, and truck leasing. The company will sign each firm to a contract based on goals for delivery volume and says that it will be possible to turn $300,000 in profit a year from such a business.

At a Seattle event senior VP of worldwide operations Dave Clark introduced Ola Abimbola, an immigrant from Nigeria who had a technical desk job but found he “didn’t want to be cooped up behind a computer.” Abimbola began driving for Amazon Flex and, as part of the Delivery Service Partners beta test, started his own delivery company. Five months later, his Aurora, Colorado-based business has almost 40 full-time and part-time workers. Thanks to Amazon’s never-ending delivery needs, he said, “my employees, all they have to do is show up for work, and there is always work to do–great, steady income.”

Being entirely dependent on Amazon for revenue isn’t without its risks; some Marketplace merchants have long complained that the company can treat them capriciously and has the power to shut down their businesses in a heartbeat. Still, if Delivery Services Partners lives up to Amazon’s vision, it will remove some of the traditional hassles of running a small company. “Our entrepreneurs don’t have to fight for customers,” Clark said at the event. “They don’t have to fight for sales. They get the opportunity, with our demand, to have a good consistent volume and to grow with Amazon as we grow.”

According to Clark, “the level of ownership with people who own those businesses is super-impressive.” He adds that Delivery Service Partners are “using our technology and using our devices, so we can understand how their on-road safety is. We have lots of audit mechanisms associated with the supplier code of conduct to ensure that they’re treating their people fairly. We have a ton of customer metrics that let us know whether we have a great customer experience or not. We think the quality control is very high.”

Read more: Amazon Drives Deeper Into Package Delivery [The Wall Street Journal]

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