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For $10K-Plus, You Can Own A Business Delivering Packages For Amazon

For $10K-Plus, You Can Own A Business Delivering Packages For Amazon

 

Amazon faces a dwindling supply of drivers, and the online retail giant has devised an ingenious way to motivate its potential driving workforce.

It’s looking for hundreds of entrepreneurs to start their own businesses delivering Amazon packages.

There’s a shortage of commercial drivers and the cost of doing business with Amazon has become prohibitive for independent delivery companies, a stakeholder says.

The new program, Amazon Delivery Service Partners, is designed to help Amazon scale and meet the growing demand for package deliveries, the company said. In 2017, Amazon shipped 5 billion items to Prime members alone, and its operating income increased 20 percent year over year to $2.8 billion, according to Entrepreneur.

Independent delivery companies must pay employment taxes, workers compensation, unemployment insurance, and added liability, among other things:

Independent delivery companies are increasingly turning away Amazon’s business, says Peter Schlactus, co-founder of the Association for Delivery Drivers, in a CBSNews interview. The reason: Amazon requires that delivery companies hire their drivers as employees, rather than work with independent contractors.

“The challenges of doing delivery work for Amazon have taken many dozens of delivery owners by surprise,” Schlactus says. “My read is that Amazon is doing this to address a dwindling supply of independent delivery companies who are willing and able to work with them.”

Amazon’s new program will train people with no logistics experience to build teams and operate fleets of Amazon delivery vehicles. But it will cost at least $10,000 in startup costs. Amazon announced a $1 million fund to help eligible military veterans get started with the program with $10,000 reimbursements.

delivering packages for Amazon
Olaoluwa Abimbola, one of Amazon.com’s beta participants in a new delivery business offering, talks to reporters, Wednesday, June 27, 2018, in Seattle, at a media event for Amazon to announce a new program that lets entrepreneurs around the country launch businesses that deliver Amazon packages. It’s another way for Amazon to gain greater control over how its packages are delivered. Photo: AP/Ted S. Warren

In a press release, Amazon said it wants entrepreneurs who will hire and coach teams of delivery drivers. Amazon will train entrepreneurs to use its technology, processes, and 20 years of logistics experience to set up and run their delivery business.

Successful owners operating with 20 to 40 vans can expect annual revenue of $1 million to $4.5 million and annual profit potential of $75,000 to $300,000, Amazon said.

Amazon has voiced concerns in the past about relying too much on third-party couriers such as FedEx, UPS and DHL, Entrepreneur reported. In its 2016 10-K report, the company counted among its competitors “companies that provide fulfillment and logistics services for themselves or for third parties.”

In 2015, Amazon launched Flex, an urban delivery program with gig workers delivering Amazon packages in their own vehicles for an hourly rate. Amazon has more than 7,000 trucks of its own and leases 40 airplanes.

If things work out, hundreds of new small business owners will hire tens of thousands of Amazon delivery drivers across the U.S.

There’s no guarantee that you’ll make $300,000 profit – or any profit at all, CBS News reported. In fact, you may be able to earn more on an hourly basis delivering packages on your own without investing the time and money to start your own enterprise.

“There is a shortage of commercial drivers, which means they can command better terms and better conditions than any time in recent memory,” Schlactus told CBS.

Delivery drivers working for themselves can earn $30,000 to $50,000 a year with a passenger car, he said, and twice as much with a van.