Amazon is a marvel of modern logistics and shipping technology. Services like Amazon Prime and other Amazon package deliveries wouldn’t be possible without a careful coordination of warehouses, shipping carriers, and delivery drivers.
With all its sophistication, however, Amazon still relies heavily on traditional carriers like FedEx, USPS, and UPS to deliver many of its packages. Ideally, Amazon would like to cut these costs, and they’ve found a new way. Amazon recently launched a program called Amazon Logistics, which allows entrepreneurs to own and operate their own Amazon delivery service franchises.
These small businesses will help Amazon solve the last mile delivery problem, which is the issue of how to get packages the final distance from the warehouse to the customer. The program has low startup costs (especially compared to other types of businesses you could start), and a respectable profit potential is there for individuals who are willing to work hard and manage a team.
So how can you take advantage of this exciting new program? In this guide, we’ll take a look. We’ll examine how Amazon delivery franchises work, their startup costs and earning potential, and how you can apply to start your own franchise today.
- What Is an Amazon Delivery Franchise?
- How Do Amazon Delivery Franchises Work?
- Amazon Delivery Franchise Startup and Operating Costs
- Amazon Delivery Franchise Profit Potential
- How Do You Apply to Start an Amazon Delivery Franchise?
- Amazon Delivery Franchise FAQ
The official name that Amazon uses for owners of its package delivery franchises is “Amazon Delivery Service Partners.” As a Delivery Service Partner (DSP), you’ll run your own delivery company, employing 40–100 employees and operating 20–40 delivery vans. You’ll be responsible for hiring the employees, managing your team, and working to deliver packages seven days a week, 365 days a year.
Amazon will work closely with you to teach you how to set up and operate your delivery business. They’ll also provide ongoing support, with each DSP having a dedicated account manager who can help them ensure they stay on track with their business goals. Amazon will also guarantee the earnings of your business (assuming you’re meeting their required delivery quotas, of course).
What does a typical day look like as a DSP? Amazon emphasizes that this is a business about leadership as much as about logistics. You have to be a people person capable of managing a medium to large team of employees. This is not a passive income business — it’s a hands-on small business that requires energy, attention, and hard work.
In a typical day, you can expect to do the following tasks:
- Schedule drivers for delivery routes
- Set up your routes for the day, hand out equipment to drivers, and ensure that all vehicles are properly working
- Lead a morning huddle to inspire and inform your drivers about the goals for the day
- Track driver progress during the day and deal with any issues (flat tires, trouble delivering packages, etc.)
- Consult with Amazon support personnel and your account manager for help with issues like routes
- Manage and evaluate your team’s progress on an ongoing basis, always striving to hire and nurture the best talent you can
- Debrief delivery drivers at the end of the day, addressing any issues that arose with packages or routes
- Ensure vans are fueled and parked for the night, as well as address any vehicle maintenance needs
- Receive feedback from your local Amazon delivery station team
- Stay aware of advancements in ecommerce and delivery technology
As you can see, this is an active business. You have to be able to juggle a lot of tasks at once and respond to emergent issues. It’s a fast-paced environment, and you won’t succeed if you’re indecisive or lack the ability to lead. That being said, the right person can thrive in such an environment and create a profitable business.
Talking about potential profits is exciting, but we should first talk about startup costs. How much will it cost you to start an Amazon delivery franchise?
Amazon works to help keep your startup costs low. This is one of the advantages of starting a delivery business with Amazon as opposed to creating a company solo. You don’t have to worry about paying to lease a receiving facility or office space, nor do you have to procure the many necessary contracts and permits without any assistance. Amazon will guide you through the entire process, and they offer many discounts exclusive to DSPs.
Still, Amazon will ask you to have some skin the game. The company states that you can get started with as little as $10,000. However, if you dig a little deeper into the application materials, you learn that you’re required to have at least $30,000 in liquid assets. This is to help ensure that you don’t get in over your head financially and that you can support yourself while you’re building your business (profit won’t be instantaneous).
What are some of the specific costs you’ll have when running your Amazon delivery franchise? Here are a few:
- Vehicle leases on Amazon’s branded vans
- Branded uniforms for employees
- Handheld devices for scanning packages
- Fuel cards
- Vehicle insurance
- Licenses and permits
- HR costs (background checks, drug tests, and interview costs)
- Accounting services and payroll
These are just some of the costs you can expect, and you should do a full investigation of the potential costs (and risks) before you decide to invest your money. Amazon will help you through this process, though you should also do your own independent research.
Note that while Amazon does not require you to use their branded delivery vehicles or uniforms, they do offer steep discounts for doing so. This is also true of all the discounts that Amazon has negotiated with third-party contractors. It’s probably in your best financial interest to use the deals that Amazon has already negotiated, but once again, you should do your own research to be sure.
Enough about expenses — how much can you stand to make with an Amazon delivery franchise? Amazon estimates the annual profit potential for a franchise operating 20–40 vans to be $75K–$300K.
This can sound like a huge amount of money, especially if you’re currently working a job that pays less. But keep in mind a couple points before you get too excited. First, these numbers are estimates based on analyses of similar businesses and assume that everything goes well.
Your situation may differ, and Amazon makes no guarantee that your business will be profitable or successful. The company provides lots of guidance, but it’s still up to you to manage your business finances and team in order to ensure maximum profitability.
Second, you should consider not just the absolute amount of money you’ll profit each year, but also the number of hours you had to put in to earn that money. An Amazon delivery franchise could earn you tens of thousands of dollars more each year than what you’re making at your current job, but that might require you to work 12-hour days seven days a week. You should consider if the money (which, again, is not guaranteed) is worth the lifestyle.
This isn’t to discourage you from starting an Amazon delivery franchise. If you’re energetic, driven, and focused, it could be the opportunity you need to take yourself to a new level of autonomy and financial independence. Just be sure you’re aware of the non-monetary costs of that new level of income.
So you’ve read this far and are still convinced you want to start your own Amazon Logistics business? If that’s the case, then you’ll need to start the application process. As with any franchise, Amazon won’t let anyone begin operating a delivery business until they’ve verified they have the necessary capital, experience, and skills.
There’s also a question of territory. Amazon is not currently looking for DSPs in all areas. Many states and cities across the U.S. are eligible for the program, but you could be denied just because you don’t live in one of them. To avoid wasting your time, the map below shows where DSPs currently operate.
Image Source: Amazon Logistics.
The process of starting an Amazon delivery franchise consists of five distinct steps:
- Request information
- Fill out a formal application
- Train at Amazon HQ
- Set up your business and train your employees
- Launch your business
1. Request information
If you’re in one of the areas shown on the map, then you can start filling out an application. To do this, visit the application page on the Amazon Logistics site. Amazon will require you to create an account. You’ll use this account throughout the application process to send the necessary information to Amazon and check the status of your application.
Once you’ve created your account, Amazon will ask you for some basic information about your interest in the program and the background you have in business, leadership, and logistics. Logistics experience is not necessary, though it does help. What Amazon most cares about is that you can lead a team and execute their delivery goals.
2. Fill out a formal application
After you’ve reviewed the basic information that Amazon will send you about becoming a DSP, you can then submit a formal application. This will be much more detailed and will require information on your financial situation, experience, leadership, and commitment to customer service.
3. Train at Amazon HQ
Assuming Amazon accepts your application, you’ll then attend a three-week training session at Amazon’s headquarters in Seattle. During the first week of training, Amazon will educate you on what it takes to run a logistics operation, as well as how to succeed in a delivery business. You’ll also learn all about the culture behind Amazon and how to translate that into the work your franchise will do.
In the second week of training, you’ll move from the classroom to the field. You’ll observe the daily processes at an Amazon delivery station, as well as assist in the sorting and loadout of packages. You’ll observe an existing DSP to learn how they do their job.
In the third and final week of training, you’ll get even more hands-on. You’ll learn how to use the tools that drivers use to deliver packages, as well as hit the road in a van to perform package deliveries. You’ll also learn how to troubleshoot common package delivery issues, and you’ll debrief with station personnel at the end of each day to get feedback on how you can improve.
4. Set up your business and train your employees
Assuming you make it through the training, you’re ready to start setting up your business and building your team. This process can take anywhere from one to a few months depending on the available labor pool in your area (and the amount of time required to get local permits).
You’ll need to officially create your business in your state, as well as get the services in place to vet and hire drivers. You’ll then need to go through the interview and hiring process (something that will continue as long as your business exists).
Once you’ve hired your team, you’ll have to train them. This is where your leadership skills will be essential, as you now need to relay everything you learned during your training at Amazon HQ. You’ll practice loading your vehicles at your delivery station, making sure that the timing is perfect. Also, you’ll have to be sure that all the necessary equipment is in place and functioning.
5. Launch your business
You’ve done all the training you can, and it’s now time to see how your business fares in the real world. In all likelihood, there will be some rough patches the first few days you make deliveries. That’s okay — Amazon expects this, and they have support personnel to help you resolve issues.
Beyond this, it’s up to you to grow your business and make it profitable. Amazon will continue to provide guidance, but the future of such a business is still relatively unknown since the DSP program didn’t launch until recently. You’re the one in control here, so make the most of the opportunity you have.
To conclude this guide, let’s take a look at some common questions people have about starting an Amazon delivery franchise:
1. Should I start an Amazon delivery franchise?
This is a question that only you can answer (with Amazon’s input, of course). Here are some questions to consider:
- Do you have leadership experience, an outgoing personality, and a desire to coach a team?
- Do you have the necessary startup capital (minimum $10K to invest plus a total of $30K in liquid assets)?
- Are you willing to take risks on a new, relatively untested franchise?
- Are you comfortable working seven days a week, 365 days a year to build your business, getting to work earlier and staying later than your employees?
2. Does Amazon offer assistance with delivery franchise startup funding?
Yes, Amazon does offer assistance to eligible military veterans who want to become DSP business owners. Amazon has committed $1 million to help reimburse up to $10,000 in costs for veterans. The company has done this because they believe that veterans are likely to possess the leadership skills necessary to succeed with an Amazon delivery franchise. You can learn more about your eligibility for this funding assistance when you apply.
3. Can I deliver for other companies with my Amazon delivery vans?
If you’re using the branded Amazon delivery vans, then you are not allowed to do so. If you choose to acquire your own vans with different branding, then nothing is stopping you legally from using them for this purpose. However, it could be difficult to balance these deliveries with the high volume of packages you’ll be delivering for Amazon (serving thousands of customers per day).
4. How long does it take to start an Amazon delivery franchise?
This varies based on your state regulations and your individual situation, but Amazon states, “From starting your application to making your first delivery, becoming an owner can
take as little as one month or as long as six months, depending on the availability of
opportunities in your area.”
5. Do I need previous business experience to start an Amazon delivery franchise?
No, not necessarily. Amazon is looking for leadership experience and a strong work ethic more than anything else. Previous business experience is something that will help the strength of your application, but it isn’t the only factor that matters.
6. How does Amazon Logistics differ from Amazon Flex?
While the two programs help Amazon accomplish the same goal of delivering packages to customers as quickly and efficiently as possible, the programs are quite different.
Amazon Flex is a program for independent contractors making deliveries using their personal vehicles. It’s much easier to get started with the program than Amazon Logistics, though the earning potential (and level of business ownership) is not as high.
Amazon Logistics, in contrast, uses DSPs who manage large fleets of cargo vans to deliver a much higher volume of orders. The people who work for DSPs are employees, not independent contractors. It’s much more difficult to get started with Amazon Logistics, but the potential payoffs can be higher.
Help Create the Future of Delivery
We hope this guide has helped you understand what it takes to start an Amazon delivery franchise. As you can see, it isn’t a quick or easy process, but it can be rewarding both personally and financially.