Amazon opens up Delivery Service Program to employees: Here's why it makes sense

Amazon is working on standard one-day shipping and needs more saturation in its logistics network. The Delivery Service Program launched last year has created 200 small businesses. In theory, former employees would require less training to ramp up.

One-day shipping? Amazon says yes ZDNet's Larry Dignan tells TechRepublic's Karen Roby that Amazon intends to widen the convenience gap between rivals with one-day shipping. The company plans to spend around $800 million in Q2 as it begins rolling out its latest innovation. Read more: https://zd.net/2ZFaWqZ

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As Amazon plows into one-day shipping it is expanding its Delivery Service Partner program to its current employees. The move makes sense on multiple levels as Amazon aims to build more logistics redundancy.

The e-commerce giant said that it will offer its current employees an incentive program under its Delivery Service Partner effort. Last year, Amazon launched a program to entice entrepreneurs to start small businesses to deliver its packages. The initial idea was to help fund small businesses that will operate 20 to 40 vans each.

Anecdotally speaking, it's pretty clear that Amazon's Delivery Service Program has worked. You can often see armies of white vans collecting packages to deliver Amazon packages.

For employees, Amazon said it will fund startup costs to $10,000 as well as three months of the former worker's gross salary.

Here's how the program will work:

  • An Amazon employee would leave their role at Amazon and be assured of consistent delivery volume.
  • Amazon would provide technology, training and discounts on assets and services. Amazon branded vans, uniforms, and insurance would also be discounted.
  • These new business owners would come off of Amazon's books, but potentially have enough cushion to get up to speed with deliveries.
  • From there, all the conditions of the broader Delivery Service Program would kick in.

Does this expansion of the Delivery Service Program make sense for Amazon? You bet. Consider the following:

  • Amazon is spending about $800 million in the second quarter to launch a logistics network for one-day shipping.
  • Those shipping costs are going to be higher if the US Postal Service, UPS, and FedEx are the sole providers.
  • By expanding its logistics networks locally, Amazon creates more redundancy. Most of these Delivery Service Program small business partners are local.
  • Amazon needs more logistics saturation. Amazon said the Delivery Service Program has created 200 small businesses. By enticing more employees to become entrepreneurs, Amazon gets more turf covered.
  • Training costs could be lower for Amazon employees. Remember that Amazon provides training for its Delivery Service Program. Former employees would presumably have a lot less to learn about Amazon's approaches since they're already tied to the corporate culture.