Amazon employees who quit their jobs to start their own package delivery companies will be eligible for up to $10,000 and three months pay under a new incentive program announced Monday morning.
The initiative is designed to further expand Amazon’s Delivery Service Partner (DSP) program, in which the company helps small business owners start their own companies to deliver Amazon packages. Amazon announced the program in June of last year and the company said this morning that more than 200 independent delivery companies have been created under the program so far.
Owning an Amazon delivery business: The risks, rewards and economic realities of the tech giant’s new program for entrepreneurs
Even with the extra financial help from Amazon, it won’t be an easy path for employees who take part in the initiative. As detailed by GeekWire last year, succeeding with one of these businesses will require an immense amount of work with no guarantee of profits.
The news coincides with a push by the company to shift its core Amazon Prime delivery benefit to free one-day shipping, from its longtime benefit of free two-day shipping. The company needs more delivery capacity to make this happen, and that’s where an expanded DSP program could help, in addition to continuing to work with UPS, FedEx and the U.S. Postal Service. Amazon is budgeting $800 million for the Prime one-day shift in the current quarter alone.
Amazon is also introducing more forms of automation in its fulfillment centers, a move that promises to eliminate some job functions.
“We received overwhelming interest from tens of thousands of individuals who applied to be part of the Delivery Service Partner program, including many employees,” said Dave Clark, senior vice president of worldwide operations, in a news release announcing the plan. “We’ve heard from associates that they want to participate in the program but struggled with the transition. Now we have a path for those associates with an appetite for opportunities to own their own businesses.”
Even as it introduces new forms of automation, Amazon says it is still expanding its workforce overall. The company has an ongoing program called Career Choice to help its workers learn new skills to transition to new careers. Amazon prepays up to 95 percent of their tuition for in-demand fields regardless of whether the employee’s new career is relevant to Amazon’s interests.
In launching the program, Amazon said the total revenue potential for Delivery Service Partner companies would be $1 million to $4.5 million a year once a company reaches critical mass. However, the profits could be as small as $75,000 to $300,000 a year based on the company’s projections.
These businesses are structured as independent companies, employing their own fleets of drivers, owning their own assets, and ultimately taking responsibility for their own success or failure. However, Amazon is looking to minimize the risk of starting a business — providing training and support for new owners, along with the promise of a steady stream of work delivering packages. That reduces or removes one of the biggest challenges facing any startup: generating revenue.
Amazon says people interested in starting DSP companies should have at least $30,000 in liquid assets to take part in the program.
That’s where the new financial incentives for employees come into play. In addition to funding up to $10,000 in startup costs, Amazon says it “will also provide financial support with a payment equal to three months of the former employee’s last gross salary while they build their new package delivery business.”
Under a previously announced feature of the DSP program, Amazon pledged $1 million to reimburse up to $10,000 in startup costs for qualified U.S. military veterans.