Amazon has delivered products to their customers using their own unique delivery service known as Amazon Logistics since 2005. This program can be a raw deal for Amazon's 3rd-party sellers and customers but can prove to be a worthy investment for entrepreneurs.
This service started as a pilot program over a decade ago in Los Angeles, San Francisco, and New York. However, they’ve managed to expand it to nearly all the major cities in the United States since then. In fact, it is still only found in the U.S.
How Amazon logistics works
This Amazon logistics service provides customers with an alternative same-day shipping option. While only prime members can enjoy these perks, non-members can also enjoy them for an additional fee.
Shipping is done 7 days a week, all throughout the day. This includes late evenings, as well as early mornings. This happens to be perfect for those packages that need signatures. Amazon treats its delivery drivers like 3rd-party service contractors and pays them as such.
They’ve positioned this program as an opportunity that entrepreneurs can invest in by becoming Delivery Service Partners (DSPs).
As a DSP, you’ll need a minimum investment of ten-thousand dollars, a developing team (that you’ll have to hire yourself), and ensure you can deliver packages 7-days a week all throughout the year.
What does this service mean for 3rd party sellers?
Deliveries via this service will have an AMZL US tracking label and have an AMZL US contact as well. These shipments are delivered to specific sorting stations where the nearby DSPs can collect packages and deliver them. Amazon gives its drivers a mobile app and software they can use for handling customer service, planning, and route guidance.
They deeply rely on 3rd party service providers right now which means that the quality and levels of service will vary from one DSP to the next. Unlike service providers like UPS, FedEx, and USPS that have standards that their customers can expect and rely on.
Amazon’s delivery service, on the other hand, can be a hit or a miss. This is why it’s a service that 3rd-party sellers might find a bit problematic. Customers that have used this service have had mixed experiences, ranging from extremely unsatisfactory to over-the-top experiences.
How Amazon Logistics affect sellers
Seller Feedback scores are vital factors that can help determine the level of success a 3rd-party seller can enjoy on Amazon. Not only does it help shape the opinion a shopper has of the seller, but it can also help one win the Buy Box as well.
Damaged and mishandled goods can lead to negative seller feedback. Fortunately for the 3rd-party seller, an FBA user or those that use Seller-Fulfilled Prime, item replacement and customer support will be handled by Amazon themselves if a package is damaged or lost.
The Amazon Logistics customer service department is the one responsible for this.
The A-to-Z Guarantee Claim Amazon offers protects customers that buy from 3rd-party sellers who fulfill their own goods.
Unfortunately, customers are more likely to share their negative experiences rather than their positive ones. This is often due to the anger and frustration they felt at the time. Amazon Logistics complaints are usually more prevalent than good feedback.
Sadly, sellers don’t have the ability to choose the logistics service provider they would like to use. So, what can they do in this situation?
Sellers need to be proactive!
As a seller, you need to message every customer at least once. A seller can mitigate product reviews and negative feedback by following up on shoppers. The best way to do this is through automated Buyer-Seller messaging systems.
When it comes to mitigating the risks, your best approach would be to request seller feedback.
3 tips on how to get quality seller feedback:
- Time your messages perfectly
You do not want your feedback messages to arrive either too late or too early. The best time to send your feedback message is when the goods have been marked as delivered. This is because the delivery is what the shopper is most likely thinking about during this time.
Note: Amazon’s delivery service does not give sellers exact times of delivery. Sellers will need to use the estimated delivery times when sending out their feedback messages. The best time is normally between 1-2 hours of what Amazon themselves project.
- Give shoppers options
Give the shopper many ways they can get in touch with you in case there are problems with their packages. Provide them with a place they can leave Amazon Logistics feedback and give them the Amazon Logistics phone number as well. All this will help you get into the mind of the buyer which, in turn, can help you mitigate product reviews and seller feedback.
- Have a singular call-to-action (CTA)
Calls to action are normally placed at the end of messages, however, that doesn’t mean you can’t have them at the top if you so desire.
How much Amazon spends on delivery
Amazon is currently spending record figures when it comes to delivery. In 2017, they totaled a gross shipping cost of nearly twenty-two billion USD. This was an increase of 35% from the previous year.
A twenty-two billion expense is a large consideration, given the thin margins of the company. For now, Amazon claims it isn’t looking to replace other logistics providers. Instead, they are looking to grow its “last-mile” shipping capabilities.
Conflict of interest over Amazon delivery
Amazon’s new delivery program is certainly set to spark hundreds, or maybe even thousands, of new small business operations to life. These initiatives supporting new small businesses and entrepreneurs are important for the overall growth of the company.
However, it also gives Amazon a way to counteract negative sentiments about how e-comm has impacted Main Street retailers all over the country.
With that said, the economics of the “last-mile” initiative might still also promise to prove challenging to these said new upcoming businesses.
FedEx and UPS are already offering very lucrative shipping deals on Amazon deliveries, leaving almost no room for the company to make some further savings. If Amazon wants their shipping partners to earn a profit, they need to really strongly assess and review how the new program is impacting the society in general.
On the other hand, Delivery Service Partners can benefit from making geography work for them. The initially available routes for DSPs show that many of these small businesses are likely to operate in the most populous regions and cities in the nation. Areas where the economics of shipping is often way stronger thanks to the volume of business and population density.
In other words, the company is leaving for the U.S. Postal Service, UPS, and FedEx the less lucrative opportunity of rural-package delivery.
This is a considerably sensitive subject for Amazon, given all that’s going on in the political spheres. Its new program was announced just before the economic impact Amazon has on the USPS was questioned by the United States President.
Amazon has also formed partnerships with established delivery service operations in the past who’ve got bigger fleets of non-branded delivery vehicles. Additionally, Amazon contracts individual drivers and gives the job of delivering packages via its Amazon Flex program, which is usually likened to Uber’s package delivery services.
However, the new program takes a slightly different approach. Rather than hiring one hundred drivers themselves, they’ll get 4-5 operators and tell them that each of them needs to hire twenty drivers for them. Furthermore, the responsibility of both staffing and managing the drivers is held by 4 to 5 contractors.
This independence is vital from legal perspectives. A series of expensive court cases have bogged down FedEx Ground’s initiative, challenging its contention that the operators hired by FedEx Ground were independent contractors.
They asserted that these workers should’ve been categorized as employees of the company. FedEx is now transitioning from the previous approach they had before to brand-new Independent Service Provider models that have all new program participation requirements. This will end up giving small contract business operations additional flexibility.
It is becoming a common issue for workers and companies alike in this budding new gig economy we’re living in.
This is where the new program by Amazon gets especially interesting. DSPs will initially be hiring drivers to be their employees instead of being an Amazon one. This shifts the direct employment burden away from the company, leaving these duties in the hands of their individual contractors, health benefits included.
This will eventually add a new and exciting twist to the small business dynamics. Also, Amazon doesn’t explicitly ban the use of vehicles that don’t have the Amazon brand plastered on them.
This leaves the possibility for these said small businesses to transport both types of goods. Amazon strongly encourages the independence of these companies. They empower these owners to build their overall business operations how they see fit.
Amazon delivery service gives sellers the chance to provide shoppers with same-day, expedited delivery services in certain geographic locations.
It can also prove extremely advantageous during those times when services such as UPS and the like are dealing with high shipping volumes which can eventually back them up and bog them down.
This service continues to grow every month and it now delivers almost 2 percent of all the packages on Amazon. If you’re a seller and you want to succeed in the Amazon marketplace, that’s ever-changing, then you’ll have to utilize all the tools available to you.
Hopefully, this Amazon Logistics review has shown you some good reasons why you should.