In 2015, Amazon launched its logistics business to shorten delivery time, as consumers expect quick order fulfillment. Amazon's logistics business was intended to ensure repeat businesses for the company and its sellers, but it has also created a business opportunity for entrepreneurs. If you are one of those looking at the Amazon business model and considering becoming one of its network partners, you may want to consider being an Amazon Delivery Service Partner.
What is Amazon Logistics?
Amazon Logistics, in its simplest explanation, is a door-to-door delivery service, or what is commonly referred to as a last mile delivery and shipping service. This network is technologically driven: Amazon purchases the delivery services while retailers and independent delivery services are the suppliers.
There are two kinds of Amazon delivery service partners. Both of these partner types are not considered Amazon employees, but they are under contract with Amazon to follow the company's standards. Here are the two different types of Amazon delivery partnerships available to budding entrepreneurs:
These are drivers who use Amazon Flex to receive shipments whenever they are available or choose to. Individual drivers are akin to a gig worker, much like the Uber drivers who go on the clock when they decide to.
Those who are searching for Amazon logistics jobs can try Amazon Flex, where they will get paid based on the number of hours they work. As its name suggests, the work hours are flexible. Those working for Amazon Flex are not considered Amazon employees but are referred to as partners.
Independent Delivery Service
This is more popularly referred to as Amazon Delivery Service Partners or DSPs. They have their own delivery vehicles and have fully employed drivers who deliver the packages on Amazon's behalf daily.
How Do I Start an Amazon Delivery Service?
Amazon Logistics relies on various third-party contractors who meet minimal professional requirements. Individuals or companies who want to become an official Delivery Provider of Amazon must meet the following criteria:
- Licensed with the Automotive and Commercial Insurance, Workers Compensations and Cargo Legal Liability
- Has policies for drivers as well as skilled and experienced drivers with complete documented safety training
- Owns cargo vehicles in good running condition with proof of service records. The cargo van or truck should, at a minimum, have 200 cubic feet capacity available for goods.
The Amazon DSP program mentioned above is an opportunity for entrepreneurs to become Amazon's delivery partners. Below are the criteria for the Amazon DSP:
- Minimum investment of $10,000
- Owners agree to be 100% responsible for the hiring and development of their teams
- Capable of managing a minimum of 40 vans and 100 employees
- Ensure that shipments are delivered seven days per week throughout the entire year
How Much Do Amazon Logistics Owners Make?
Based on Amazon's projections, DSPs with 40 vans will have an annual revenue range of $1 million to $4.5 million, while profits are around $75,000 and $300,000 annually.
What is Amazon Logistics' Impact on Sellers?
Seller feedback ratings are affected by two main factors, namely, shipping time and delivery expectations. Customers are likely to provide a favorable review to sellers if they receive their orders fast or within the expected timeframe. On the other hand, late deliveries could result in low ratings for sellers. As such, Amazon delivery partners must work efficiently so as not to hurt a seller's reputation. This is especially true since a seller cannot pick a delivery provider and have no control over Amazon Logistics.
How Can an Amazon Logistics Partner Ensure Timely Deliveries?
Arguably, it is challenging to handle delivery vehicles, especially if you have more than 40 vans in the fleet. Fortunately, there are technological solutions designed to make fleet management easier.
At DispatchTrack, we have solutions to help any business manage its fleet effectively. Our routing and planning product allows for route optimization, where all it takes is a little setup and a few clicks to schedule thousands of stops a day. Our telematics and compliance tools provide managers with visibility on their drivers and an easy way of complying with trucking regulations. These are some of the many technological tools we make available to possible Amazon delivery partners to help them meet the high volume and demand for fast deliveries from Amazon customers.
Amazon Logistics is the retailing giant's way of creating a large shipping network to keep up with the growing demand for eCommerce and fast deliveries. There is a business opportunity for individuals and companies to earn healthy profits from being Amazon's logistics partner. But delivery partners must also ensure timely deliveries and careful handling of packages to ensure customer satisfaction over the long haul. Fortunately, there's technology to help DSPs in managing their fleet that's both powerful and affordable.