🚚 Amazon DSP: Pros and Cons of Owning a Delivery Business
Are you considering starting your own package delivery business? Amazon's Delivery Service Partner (DSP) program might be the opportunity you're looking for. As part of Amazon's effort to expand its delivery network, the DSP program enables entrepreneurs to start and operate their own delivery businesses. In this article, we'll discuss the pros and cons of owning an Amazon DSP business.
Table of Contents
- **Low Startup Cost**
- **Great Returns**
- **Business Ownership**
- **Amazon Support**
- **Technology and Tools**
- **Delivery Network**
- **Scalability**
- **Brand Presence**
- **One-Year Contract**
- **No Growth Opportunities**
- **Business Does Not Appreciate**
- **You Take All the Risk**
- **Micromanagement**
- **Holiday Season Safety Risk**
- **Dealing with Employees**
- **Lawsuits**
Low Startup Cost
One of the biggest advantages of the Amazon DSP program is its low startup cost. Amazon only requires as little as $10,000 down to start the program, which is used to purchase items needed to start your routes. Most businesses require a lot of startup cash, but this program is not one of them.
Great Returns
While Amazon says that DSP owners will make $150,000 a year, most DSP owners will make much more than what Amazon advertises. DSP owners will net three to four times that amount if they run their routes efficiently.
Business Ownership
In the Amazon DSP program, you get to run the show, own and manage your delivery business, hire and lead your own team of drivers, and handle the day-to-day operations. It's not just a job; it's your business, and your success is in your own hands.
Amazon Support
Although DSP operates independently, Amazon stands firmly behind them, offering a robust support package to kickstart and streamline their delivery businesses. This comprehensive support package includes cutting-edge delivery technology, tailor-made training programs, and hands-on operational assistance from day one. DSPs have the tools and knowledge needed to be successful.
Technology and Tools
DSPs utilize Amazon's advanced delivery technology and tools to manage their operations. This includes the Amazon delivery app, which provides real-time tracking, route optimization, and other features to help drivers deliver packages efficiently.
Delivery Network
DSPs play a crucial role in Amazon's ever-growing delivery network. Their pivotal role involves delivering packages straight to customer doorsteps, playing a key part in Amazon's last-mile delivery strategy. What sets this opportunity apart is that from day one, you'll have direct access to Amazon's vast customer base. No need to worry about marketing and acquiring new customers; your delivery business is ready to roll with customers in hand, providing an unprecedented advantage in the competitive delivery landscape.
Scalability
The DSP program allows entrepreneurs to scale their delivery business as they see fit, potentially expanding their operations to cover large geographic areas or handle higher package volumes, which can lead to increased revenue and profitability.
Brand Presence
DSPs operate Amazon-branded vehicles and uniforms, contributing to the recognizable and consistent branding associated with the Amazon delivery business.
One-Year Contract
One of the cons of owning an Amazon DSP business is that you only get a one-year contract. All DSP owners are under a one-year contract agreement, which means after one year, Amazon may decide not to renew your contract. So, you are taking a big risk potentially giving up your corporate job for an opportunity that may only last one year.
No Growth Opportunities
Many business owners would like to expand and grow their businesses, but with the DSP program, Amazon restricts you from how big you can become, even though you're performing really well.
Business Does Not Appreciate
The great part of owning any business is that over time, the value of your business will increase. With the DSP program, you are stuck in one place potentially forever because Amazon restricts business growth, and you do not own any real assets outside of your one-year contract. The value of your business will be limited.
You Take All the Risk
Amazon designs the DSP program as an independent contractor business, which means you are not affiliated with Amazon. Although you drive Amazon vans and wear Amazon uniforms, in the eyes of the law, you are an independent company. This means if your driver gets into a serious accident, that's your problem, not Amazon's.
Micromanagement
Amazon is known for its business savvy and strict work code. Unfortunately, Amazon brings that same approach to the DSP program, which means sometimes you will feel like an employee rather than a business owner. Amazon will micromanage everything you do, from the time you pick up the packages to the time your employees return from their shift. Amazon is always watching, and they're very involved.
Holiday Season Safety Risk
During Prime Day in the month of July or Christmas holidays, Amazon will bend their own rules when it comes to safety. Amazon's main focus during those times is to deliver the packages at all costs. While that may be great for the customer, as a DSP owner, you are put in a compromising situation where your drivers may be on the road until after midnight. Having a driver out that late delivering packages is a risk to your business. Amazon will push you to get all packages delivered, and safety will be an afterthought. Remember, you are the one under the one-year contract agreement. If you are not meeting certain requirements, your contract will not be renewed. As a DSP owner, you need to ensure all of those packages are being delivered.
Dealing with Employees
Having employees can be great, but dealing with hundreds of employees that all have different personalities will be challenging. Sometimes, to meet the demand of delivering the packages, you will plead with your employees to come into work. A difficult situation to be in. You, as the owner, may sometimes have to deliver your own packages because employees decided not to come in, and you want to ensure that your business is operating well. Amazon drivers have a very high turnover rate because the job, in and of itself, is very difficult. So, you'll have a lot of drivers quit, and you'll have very high turnover.
Lawsuits
One thing most people don't mention is that your DSP drivers will get into accidents. The longer you operate, the more of a reality this will become. There will be lawsuits. Fortunately for you, your insurance company will take care of most of these, but after a while, it will become very difficult to find reasonably priced insurance, and the lawsuits will continue even after you're no longer a DSP owner. Not to say that you will be personally responsible; you will not because that's what you have insurance for, but lawsuits are one thing that you will have to deal with as a DSP owner.
Highlights
- Low startup cost
- Great returns
- Business ownership
- Amazon support
- Technology and tools
- Delivery network
- Scalability
- Brand presence
- One-year contract
- No growth opportunities
- Business does not appreciate
- You take all the risk
- Micromanagement
- Holiday season safety risk
- Dealing with employees
- Lawsuits
FAQ
Q: How much does it cost to start an Amazon DSP business?
A: Amazon only requires as little as $10,000 down to start the program.
Q: How much money can I make as an Amazon DSP owner?
A: While Amazon says that DSP owners will make $150,000 a year, most DSP owners will make much more than what Amazon advertises. DSP owners will net three to four times that amount if they run their routes efficiently.
Q: What kind of support does Amazon offer to DSP owners?
A: Amazon offers a robust support package to kickstart and streamline their delivery businesses. This comprehensive support package includes cutting-edge delivery technology, tailor-made training programs, and hands-on operational assistance from day one.
Q: What are the cons of owning an Amazon DSP business?
A: The cons of owning an Amazon DSP business include a one-year contract, no growth opportunities, business does not appreciate, you take all the risk, micromanagement, holiday season safety risk, dealing with employees, and lawsuits.
Q: Can I expand my Amazon DSP business?
A: With the DSP program, Amazon restricts you from how big you can become, even though you're performing really well.
Q: What happens if my driver gets into an accident?
A: Amazon designs the DSP program as an independent contractor business, which means you are not affiliated with Amazon. This means if your driver gets into a serious accident, that's your problem, not Amazon's.
