There’s risk in any business. But if you asked me to invest in a business with these built-in advantages, I’d certainly listen.
I know a lot of people who have made a ton of money on Amazon.
Now, Amazon says it wants to recruit entrepreneurs to build a national network of small, independent delivery companies–driving leased vans with Amazon branding. If you’ve aspired to start your own business, and you have leadership ability and access to a relatively small amount of capital, it could be well worth looking at.
I’m going to refer you to the official Amazon press release, with links to other pages with more information. It’s a new program, and there are some questions. But here’s the announcement, the “why” behind it, and a few reasons why it might be worth looking at.
“Wanted: Hundreds of Entrepreneurs”
Amazon says it’s hoping to recruit “hundreds” of entrepreneurs to launch independent delivery businesses that will be contacted to deliver Amazon packages. The companies will lease vans (on favorable terms, apparently, negotiated by Amazon) that will be branded with the Amazon Prime logo.
Amazon reportedly handles 40 percent of all online delivery purchases. That’s an utterly staggering number, and it only continues to grow. Meantime, CNBC points out that in its latest 10-K filing, “Amazon noted the risk associated with relying on external partners like FedEx and UPS.”
So, it makes a lot of sense for Amazon to try to build out a network like this quickly.
“Amazon will take an active role in helping interested entrepreneurs start, set up, and manage their own delivery business. Successful owners can earn as much as $300,000 in annual profit operating a fleet of up to 40 delivery vehicles,” the company said in its announcement.
A giant, dedicated customer
This is a massive potential advantage. If someone came to me suggesting he or she would like to launch a delivery business, I’d be skeptical. But if they came saying they had already negotiated a deal to deliver for Amazon, I’d be really interested.
I’d love to see more, practically speaking, about how Amazon will evaluate these companies’ performance, and how delivery businesses could hedge against competitors in the same geographic area.
My sense is that a lot of this will be a function of how well you build the relationship with Amazon once you get going.
Very low startup costs
Amazon claims startup costs could be as low as $10,000. I suspect that’s likely to be a rare minimum–for the smallest business in the least expensive market. However, given that perceived access to capital stops many aspiring entrepreneurs from launching, this could be key.
Separately, Amazon says it’s created a fund of $1 million to help put up to $10,000 in startup costs each for qualifying U.S. veterans.
In fact, part of why this program resonates with me so much is that I was just talking with a friend last night–a great guy who manages a retail store and who would love to work for himself, but who doesn’t have a lot of money to launch something independently. He seems like exactly the kind of person this was designed for. And I’ll bet there are thousands of people just like him around the country.
Training and support
Included in the program: three weeks of training, including one week at Amazon headquarters in Seattle, and two weeks “in the field working alongside the community of existing owners and drivers to learn the tips and tricks of operating a successful delivery business from those who know it best.”
Amazon also says it’s providing big-time support acquiring the assets you need. The details here will be crucial, but according to the website this includes “exclusive deals on Amazon-branded vans, comprehensive insurance, industrial-grade handheld devices, and other services.”
Amazon’s model here suggests it wants companies that can grow to support in the neighborhood of 40 to 100 employees, with 20 to 40 Amazon-branded vans (and a corresponding number of routes).
Your role will be to recruit and manage drivers and routes, “while we take care of getting you set up and ready to operate out of an Amazon delivery station in your city,” Amazon’s materials say.
And while Amazon’s projected $300,000 annual profit model will be attractive enough to a lot of people, I suspect that some entrepreneurs could find ways to make much more than that.
For example, while it seems clear that you wouldn’t be able to use the Amazon-branded trucks to deliver products for companies other than Amazon, some clever business owners will find ways to scale their success beyond Amazon.
One such business owner who participated in a beta program with Amazon said he built his company to a 40-employee operation in five months.
“I had prior experience running my own business but not in logistics. … Backed by Amazon’s resources and logistics experience, and its encouragement to ‘learn while I earn,’ this opportunity was a no-brainer,” said Olaoluwa Abimbola.