Amazon is huge. For reference, it isn’t the single biggest online retailer that can be found out there, but it is one of the biggest. Moreover, it has the promise of becoming bigger and bigger still, so much so that it is expected to outpace its partners’ capabilities to provide it with the services that it needs to continue running its revenue-earning operations in an effective and efficient manner.
To be exact, Amazon is expected to expand so much in such a short period of time that it will outstrip the capabilities of its current partners in UPS, FedEX, and the U.S. Postal Service to ensure that its customers’ purchases will reach their intended destinations on time. In fact, it has already started running into such issues during high-demand periods, which has prompted it to offer refunds to upset customers in the past. Something that was critical for Amazon if it wanted to be able to maintain its customers’ goodwill but not something that it should put up with if it wants to run a profitable business in the long run. As a result, it is no wonder that Amazon is treating this particular problem with such seriousness that it is starting up what it is calling its Delivery Service Partner program.
What is the Delivery Service Partner Program?
In short, the Delivery Service Partner Program is intended to encourage people to start up delivery companies that will provide Amazon with the volume of delivery service that it is expected to need in the future. Like the name suggests, these delivery companies won’t be the bigger, more widespread delivery companies that most people are familiar with but rather smaller, more local counterparts. Essentially, each delivery company is expected to consist of something between 40 and 100 people operating something between 20 and 40 Amazon-branded vehicles for the purpose of making sure that everything gets where it needs to be. As a result, while said delivery companies will be rather limited when it comes to the customers that they serve, there is a significant upside for interested individuals in that the start-up costs will be low as well. In fact, the start-up costs have been estimated to be as low as $10,000 in some cases, which is not counting the promise that veterans will be able to send in an application for their start-up costs to be reimbursed.
What Does This Mean?
This program is an interesting reminder of the kind of power that a motivated mega-corporation can muster when it feels that there is a sufficient need. Granted, it hasn’t had much time to take effect. However, there isn’t much doubt that it will produce noticeable results, particularly since Amazon has gone to a fair amount of trouble to reduce the barriers to entry.
However, it is interesting to note that this isn’t intended to serve as a replacement of Amazon’s current partners in UPS, FedEx, and the U.S. Postal Service. Instead, Amazon has stated that this is intended as a supplement to their delivery service because it delivery service needs are expected to grow so much that it won’t be able to satisfy them through its existing options. However, it will be interesting to see whether that position will change in the future as more and more delivery companies spring up because of the Delivery Service Partner service, though that isn’t something that will become clear anytime soon.
With that said, one can’t help but wonder how the delivery service companies that start up because of the Delivery Service Partner program will be treated. Simply put, the nature of the program means that said delivery companies will have very little bargaining power compared to Amazon. After all, a smaller company is always going to have a disadvantage compared to a bigger counterpart, but this becomes particularly true when there are other factors working against it as well. For example, Amazon can still call on UPS, FedEX, and the U.S. Postal Service, meaning that there is a serious limit to these delivery companies’ bargaining power even if they are the sole example operating in their particular region. Likewise, these delivery companies will be reliant on Amazon, thus narrowing their other potential options. Summed up, that is a lot of bargaining power for Amazon but not much for the delivery companies, which is something that interested individuals should at least think about when running through their assessments.