On Thursday, Amazon introduced a new way to deliver packages to customers. With the Delivery Service Partners program, independent sellers can run their own delivery fleets of up to 40 vans.
Amazon currently has 75 stations in the United States, and each fleet will start its day at one of these locations. Packages ordered from Amazon are delivered to the warehouses, where Amazon’s drivers are ready to head out on deliveries. Amazon has developed intuitive algorithms to determine which packages end up at its own facilities and which are sent to UPS or FedEx to be sent out for delivery.
“This is all about scaling cost effectively,” said Dave Clark, senior vice president of Amazon Worldwide Operations. “We are going to have to meet this growth, and it’s outpacing the growth of our core providers.”
To get started, interested sellers will need to spend roughly $10,000 in startup costs, which include discounted trucks, uniforms, fuel, insurance, and other resources.
The partner, once vetted and accepted by Amazon, will lease vehicles with the Amazon Prime logo to be used for delivery. Each seller will be responsible for hiring delivery drivers.
According to Amazon, those who succeed in the program can make up to $300,000 in annual profit. The company is looking to help entrepreneurs build their businesses, while giving them access to “sophisticated delivery technology.”
Qualifying military veterans looking to start up delivery businesses can earn up to $10,000 in reimbursements.
“Customer demand is higher than ever, and we have a need to build more capacity,” Clark said.
In its statement, Amazon reported that the Delivery Service Partners program will not only enable “hundreds” of small businesses to get off the ground, but it will also address the country’s trucker shortage by employing tens of thousands of new delivery drivers.
For three years, Amazon has had the Amazon Flex program -- a delivery program in over 50 U.S. cities that operates much in the same way as Uber or Lyft. Drivers work hours that are convenient for them and deliver packages from their own cars for $18 to $25 an hour.
While Flex will continue under this new delivery program, Clark said this latest initiative is designed to take things to the next level.
“Flex is all about leveraging capacity,” he said. “We looked at our history with small business, and we said we can do the same thing in last mile and people can own a manageable size business.”