With its Delivery Service Partner program, Amazon enables you to launch your own small business by leveraging its logistics expertise to operate a delivery franchise.
We’ll go over what an Amazon delivery franchise is, how it operates, how much it costs, and how to apply to begin providing logistics services for Amazon.
In this article you will learn:
- What is a franchise for Amazon delivery?
- How Do Franchise Services For Amazon Delivery Operate?
- How Much Does It Cost to Own an Amazon Delivery Franchise?
- As an Amazon Delivery Service Partner, How Much Can You Earn?
- How Can I Start a Franchise in Amazon Logistics?
- Is it a wise investment to open an Amazon delivery franchise?
- In summary
- Conclusions
What is a franchise for Amazon delivery?
The e-commerce biggest vulnerability was likely the packages’ delayed delivery, since it kept depending on courier services like FedEx and UPS.
As a result, Amazon established the Amazon Delivery Service Partners program, which enables small enterprises to run and own a franchise for an Amazon logistics business. The massive online retailer now has its own logistics company so it won’t have to rely on FedEx and UPS.
With the help of this program, Amazon has defeated the carrier companies in its specific battle, increasing its solvency and decreasing its reliance on them over time. The same rationale drove Amazon to introduce Amazon Flex.
Amazon has been trying to figure out how to get more authority over the way it ships its products. Launched in 2018, the Delivery Partner program allows contractors in the US and other countries to begin providing services for Amazon package delivery.
In fact, the aim of the Amazon delivery franchise program is for packages to be delivered to customers directly from an Amazon center or a franchise station, keeping all operations inside the business and preventing interference from outside parties.
How Do Franchise Services For Amazon Delivery Operate?
Currently, the US, Canada, UK, Spain, Germany, Italy, Ireland, Brazil, and India offer Amazon Delivery Service.
Entrepreneurs can lease vans bearing the Amazon brand as part of the program’s “flexible lease” option, which supplies delivery vehicles for its operations.
The volume of packages your company delivers, upcoming shopping events, and business performance will all affect how many Amazon-branded vans and staff you need. You can begin with five vans and a small staff after the training and business launch. You could eventually oversee between 20 and 40 vans and 40 to 100 workers.
Naturally, restrictions on personnel and fleet size are in place to prevent any delivery franchise from becoming overly dominant in logistics relative to Amazon.
But if you already have a fleet of cars, you can continue to use them as long as they still fit the requirements.
How Much Does It Cost to Own an Amazon Delivery Franchise?
The first requirement to become a franchisee of Amazon Logistics is pay-to-play.
Starting salaries start at $10,000, according to Amazon, and you’ll get two weeks in the field and three weeks of practical training.
Although delivery vehicles are not included in the upfront cost, it does cover licensing, services like accountant and lawyer fees, setup supplies (like a laptop and timekeeping software), the first five Amazon-branded vans, recruiting expenses like job postings and driver training, and owner training.
In addition to the $10K, Amazon demands that business owners have $30K in liquid assets when applying for the delivery business program. This is done to ensure that applicants have enough money to cover both the startup costs and ongoing expenses related to training and expanding their businesses.
As an Amazon Delivery Service Partner, How Much Can You Earn?
As we previously stated, anyone who wishes to become a Delivery Service Partner will actually have to pay more than $10,000 for a full-time position. As a result, entrepreneurs will not be aware of the precise minimum wage.
Although Amazon claims on its page that a delivery franchise could make between $75,000 and $300,000 in annual profits, these revenue and profit estimates are based only on the company’s Amazon DSP brochure.
Lastly, there are no guarantees made by Amazon about the volume of deliveries. Therefore, your earnings will be low and you might not meet Amazon’s projections if your shipping station experiences a slow season.
How Can I Start a Franchise in Amazon Logistics?
The work of starting and expanding the company must come first. This includes obtaining the necessary licenses, conducting interviews and hiring decisions, planning business services, arranging for payroll, and mentoring staff to go above and beyond Amazon’s requirements with each delivery.
Therefore, in order to meet Amazon’s profit projections, entrepreneurs must begin with a minimum of five delivery vans and eventually aim to have a fleet of twenty.
The online retailer estimates that each franchise will eventually be able to employ 100 people and operate a maximum of 40 vans, which could result in an annual profit of $300,000, though actual results may differ.
The retailer claims that this program is close to its 75 shipping stations, which are dispersed throughout the United States.
Furthermore, franchisees will only be able to work for other businesses picking up and delivering packages if they add another car to their fleet without using the official Amazon logo.
Is it a wise investment to open an Amazon delivery franchise?
Your risks are increased if Amazon is your only customer or business. This is because you are putting all of your eggs in one basket.
Your company and your profit could be greatly impacted, for instance, if Amazon decides to restructure their business and close down a warehouse near your station because they aren’t seeing enough demand or simply altering their strategy because they don’t need as many of these partners as they previously thought they did.
In a similar vein, high selling fees are a yearly burden for Amazon sellers, and by working with them, Amazon is able to increase its profit margin.
Additionally, whenever an Amazon seller’s products are doing well, Amazon decides to produce a comparable product internally, putting it under the Amazon brand, and lowers prices to the point where sellers have no chance of competing with its massive monopoly.
Similar to Amazon Delivery Service Partner, the Amazon Flex program was created to lessen the company’s dependency on outside delivery providers. With this kind of business arrangement, Amazon drivers operate their own companies out of their personal vehicles, and their revenue is contingent solely upon demand from Amazon.
That means you will be totally reliant on Amazon if you decide to use Amazon Delivery Service Partner as your business model.
Because there is no business control through the Amazon Delivery Service Partner program, investing in it can be risky. Extremely high risk and significantly lower profit margins than reported.
In summary
Benefits and Drawbacks of Owning an Amazon Delivery Franchise
The advantages and disadvantages of partnering with Amazon for delivery services are enumerated in the table below:
CONCLUSIONS
Anybody in those mentioned nations and territories may establish a parcel business under Amazon’s auspices, provided they meet the $30,000 liquid asset requirement. However, before making an investment in any business opportunity, you must weigh the risks and benefits as with any other investment.
The Amazon Delivery Service Partner Program may appear to be a viable option for entrepreneurs seeking a dependable and inexpensive business model to launch. Nevertheless, before choosing a choice, it’s crucial to gather information and weigh all the available options.
One of the most crucial things to keep in mind is that you will bear the same risks—if not more—than a contractor because the amount of work you do will depend on the retailer.
Are you the owner of an Amazon franchise? What is your level of experience? Please let us know what you think by leaving a comment below!