Online retail giant Amazon has announced the launch of a new program called Delivery Service Partners through which it will encourage people to launch delivery services for their local areas as its partners.
The U.S-based firm wants to solve one of its biggest challenges, last mile delivery by creating business opportunities for people. The new program will allow entrepreneurs to carry out delivery services using Prime-branded vans. Entrepreneurs will be allowed to run a fleet of up to 40 vans. The delivery program has also been described as Amazon’s latest scheme towards gaining more control of the delivery network which supports the Prime business which handles more than 5 million shipments every year.
Delivery Service Partners will help create jobs and business opportunities for entrepreneurs while helping Amazon to achieve last-mile delivery. It will thus be a win-win situation for Amazon and budding entrepreneurs who decided to take advantage of the opportunity through their own delivery units.
Each of the delivery units will kick off every morning by picking parcels at Amazon stations of which there are 75 of them in the U.S. The drivers of the delivery vans will be clad in blue shirts and black hats with the Amazon logo. The online retail giant will determine which packages to be sent to Amazon delivery stations and which ones to be sent to UPS and FedEx using an algorithm.
“This is all about scaling cost effectively. We are going to have to meet this growth, and it’s outpacing the growth of our core providers,” stated Amazon’s Senior Vice President Dave Clark.
The rising cost of shipping and external partnerships
The launch of the program might have something to do with Amazon’s latest annual 10-K filing in which it pointed out some of the risks of relying on partners such as UPS and FedEx. The firm stated that customer experience and its operating results if it failed to negotiate acceptable terms with the two delivery companies.
The 10-K filing also pointed out that shipping costs surged from $11.5 billion in 2015 to $21.7 billion last year and that it also expects the shipping costs to continue increasing. The new program should help control some of the costs while allowing the entrepreneur to handle some aspects of the operations on Amazon’s behalf. Amazon announced that it eventually plans to support hundreds of entrepreneurs to get started on the program and eventually create jobs for many more delivery drivers from all over the U.S.