Big Bucks or Big Bust? Amazon’s $26B Delivery Service Partner Question

When Amazon launched its Delivery Service Partner (DSP) program in 2018, it was presented as a way to help tiny companies go big and would-be entrepreneurs go into business.

It was meant to be a win-win — people launch a business with as little as $10,000 and earn as much as $300,000 annually, and Amazon solves its never-ending delivery dilemmas without taking on new employees.

Four years later, Amazon points to the DSP program as a major success, stating that it has more than 3,000 DSPs around the world that employ more than 275,000 drivers and deliver in excess of 10 million packages daily. Further, these small businesses generated more than $26 billion in revenue since the program launched, Amazon said in a blog post on Friday (Aug. 19).

After initially launching in the U.S., global operations began Canada, the U.K. Spain and Germany. The DSP program now delivers packages in more than 14 countries, including France, Italy, Ireland, Brazil, the Netherlands, India, Belgium, and Austria. Saudi Arabia was just added as the first Middle Eastern country.

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Amazon’s blog post features two successful small businesses celebrating milestone achievements as DSP entrepreneurs. There is a flip side, however, that’s been happening around kitchen tables and in conference rooms that tell a darker tale, one filled with lawsuits, shattered dreams and funky algorithms.

Despite being independent businesses, Amazon “exercises near complete control,” a proposed class-action lawsuit alleges, Geekwire reported. The suit accuses the eCommerce and tech giant of treating DSP businesses as franchisees but without any legal protections.

The lawsuit was filed against Amazon Logistics in federal court in Seattle in April by Fli-Lo Falcon, LLC, a company operating as a DSP for Amazon in the Sacramento, California area from October 2019 to May 2021. The case is ongoing.

Other businesses in lawsuits have alleged they were given false promises regarding how much they would make, some claimed they were not treated fairly and some accuse Amazon of unlawfully ending their delivery contracts, Geekwire reported.

A January lawsuit filed against Amazon Logistics by Ahaji Amos in the Middle District of North Carolina alleged that Amazon relies on federal Paycheck Protection Program loans to keep its DSPs from going under. She said the DSP program misrepresents how much can be earned and sets demands that cannot be met. Two DSPs in Oregon sued Amazon Logistics with similar allegations in October 2021, Protocol reported.

Read more: Amazon Tests Same-Day Mall Deliveries

DSP participants interviewed by Bloomberg last October said unrealistic package delivery demands on top of algorithms that made decisions based on data without context made it near impossible to turn a profit. DSP owners were left deciding how to adhere to Amazon’s safety requirements, speed, volume and other musts without mistreating their workers or getting paid less by Amazon.

There also wasn’t anyone to negotiate with if the algorithm was off — the company was inclined to stick to the machine data without differentiating things like street closures, parades and dense locales, per the report. In the end, a lot of small business owners took less pay and ended up getting out, often without anything to show for it.

Participants interviewed by Protocol in March — even those making near the higher side of Amazon’s advertised earnings — said they only did well because they had good locations and broke Amazon’s rules. Regardless, they still said they felt like Amazon employees, not business owners.

But for the DSPs that do well with the program, like Salvatore Caiazzo, owner of Regional Express Inc., Atlanta, Georgia, featured in Amazon’s blog post, the rewards can be life changing. Since starting with the program since its inception, his company has grown to almost 200 employees with locations in Ohio, Pennsylvania, and Georgia.

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