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Amazon Delivery Service Provider – Another Basket For Eggs

Thursday, Aug 23, 2018

What are partnerships you are overly dependent upon in your business?

“Don’t put all your eggs in one basket” — Can’t you hear the advice from your mom now. Moms are always right. Amazon has for over 20 years been consistently pushing and innovating their entire supply chain with particular emphasis on faster delivery to your home, the last mile. With Ecommerce growth continuing, the agreement with USPS being a political hot potato, and the UPS and FedEx businesses negotiating higher prices, being stretched with capacity and ability to invest and innovate, Amazon announced “yet another” program to scale Amazon branded fulfillment called “Amazon Delivery Service Partner” or DSP.

DSP offers entrepreneur’s with a minimal capital investment to build a team to deliver Amazon packages. Operators will get access to Amazon branded trucks and uniforms, they will hire teams and run the business. Signup for the program and a bit more information is available here.

This is one of several initiatives to bring flexibility, speed and control to Amazon as logistics continues to be a key part of the customer experience for Amazon. Amazon Flex is the Uber-like model allowing essentially anyone to pickup packages and deliver for Amazon. Amazon Seller Flex is a newer and different service providing sellers access to Amazon negotiated carrier rates and makes seller inventory Prime eligible while still in seller’s warehouse. This program has far reaching implications as Amazon will be making the allocation decisions regarding which carrier to use, will bring more volume under Amazon’s negotiating control and, in some ways, makes warehouses using Amazon Seller Flex a virtual part of the Amazon fulfillment center fleet.

Amazon Prime Air, Amazon’s investment in Atlas Air, Amazon Lockers and continued fascination with drones and blimps are just part of the portfolio of approaches Amazon is developing to ensure great customer experience, control of key capabilities and costs, and never giving a partner too much influence in their business. Even Wholefoods is part of the equation, serving multiple purposes in delivery to the customer. The traditional competition and market’s reaction is basically “in the short term, this will not have be a significant impact or competitor to us”. They are right. But Amazon is not investing in the short term, but overview a longer period of time, programs like Amazon Delivery Service Partner can and will be both a service Amazon leverages to deliver it’s own packages, as well as delivering non-Amazon packages. And it’s not one capability that will bring down the incumbents, it’s the combination of capabilities, bringing customer ease and economies of scale to Amazon’s advantage which make Amazon a next-generation competitor for legacy logistics organizations.

What are partnerships you are overly dependent upon in your business? How are you innovating where your customer experience is critical and the costs to your business are high and going higher? In these critical functions of your business, having one bet is great, but risky. Have multiple bets and a portfolio of efforts to gain better control of critical dependencies in your business. Listen to mom — don’t put all your eggs in one basket!

John Rossman is a Former Amazon Executive, advisor, thought leader and keynote speaker on Digital Strategy and Amazon Leadership Principles. He travels the country speaking on Digital Disruption, IoT, Innovation, and Leadership — “The Amazon Way”. For more information, visit https://tinyurl.com/JohnRossman. 

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