Amazon has released new figures regarding the expansion of the Delivery Service Partners program, which states that 3,000 independent companies currently provide greater than 10 million packages to Amazon every per day. They employ 275,000 and earning a total of $26 billion in sales over the past four years.
The four-year birthday in this DSP program, this is the most recent in a series Amazon blog posts featuring the companies who have created the dark blue Amazon Prime delivery vans commonplace throughout the city.
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Amazon’s assertions are in contradiction to the claims made in lawsuits and reports where former DSP firms claim that they were “treated like robots” by the company’s algorithms. being treated as franchisees without any legal protections that could be derived from such a distinction, and forced to struggle to make profit in the terms of financial compensation that Amazon has set to DSP. DSP program.
“As we celebrate DSP’s four-year anniversary, we are proud of the choices we made to establish a program that enables so many small business owners to achieve success for themselves, our customers, and the communities where they serve,” the company announced in a post the afternoon of Friday.
U.S. taxpayers have also contributed to the process as public records reveal.
- Two delivery companies featured on Amazon in its most recent post, Milum Express LLC of Atlanta along with Regional Express Inc. of Fort Lauderdale, Fla. They were granted Paycheck Protection Program credit in the year 2020 that exceeded $1 million, each through associated corporate entities, U.S. Small Business Administration documents show. The interest and loans were later repaid.
- Five other DSP companies mentioned in other Amazon posts this year have received PPP loans in lesser sums. GeekWire confirmed the loans by comparing information in the posts to SBA reports and state corporation filings. The total loan received by seven companies is more than $4 million.
- A report from CNBC at the end of 2020 identified 48 additional DSPs that received PPP loans.
The CARES Act, which enabled the loans in the past, required companies to attest “that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.”
Delivery Service Partners are independent businesses that employ employees to deliver packages using Amazon-branded vehicles and uniforms under agreement to the business. Through working with delivery Partners, Amazon is able to stay clear of a lot of legal and financial liabilities that could arise from employing drivers directly.
Following the recent blog post about the DSP program’s milestones, GeekWire asked Amazon if Amazon believes it is reasonable, with hindsight the service providers to be receiving federal aid.
They are all small business owners, and each is accountable for their personal P&L and their own finances, therefore in the event that any could have qualified for and benefited from this PPP loans, the partners could have made the decision independently of Amazon,” said Maria Boschetti an Amazon spokesperson via email.
Boschetti said, “We’re proud of our delivery partners and we’ve invested heavily to help them succeed, including special recognition bonuses of over $1B in 2020 and more than $700MM in 2021 to increase the rates we pay DSPs, and to support them in offering sign-on and retention bonuses and offset recruiting costs.”
Amazon on DSP earnings
Amazon Delivery Service Partners have benefits from an integrated source of business and can tie their entrepreneurial goals with one of the biggest businesses around the globe, as well as the capability to adhere to Amazon’s operating guidelines and, in a lot of cases they can house their operations in its delivery facilities.
Profits aren’t guaranteed. Since the beginning, low operating profits have proven to be a major danger for DSP firms, as documented by GeekWire in their analysis of this time.
But, Amazon spokesperson Boschetti said this week that “the vast majority of these DSPs have consistently out-paced our marketed profit expectations for the program,” citing the Amazon page which estimates that the annual profits could be $75,000 to $300,000 . This is for “fully ramped” DSP partners with 20-40 vans.
GeekWire has left messages for those who own both of the companies that are featured in the latest Amazon article, Milum Express and Regional Express to get more information about the economics behind their operations.
The company began the DSP program in the context of a larger development of the AMZL logistics network. The goal is to decrease its dependence upon United Parcel Service and the U.S. Postal Service for last-mile deliveries.
Amazon states that the DSP program is available across more than 14 countries that include France, Italy, Ireland, Brazil, the Netherlands, India, Belgium, and Austria and was recently started within Saudi Arabia as its first Middle Eastern country.
Amazon has seen steady growth in its DSP program in the last four years.
- There are more than 3000 DSP firms in more than 14 countries and employing more than 275,000 drivers.
- That’s compared to the 2,500 DSPs as well as 150,000 driver by 2021, as well as 1300 DSPs along with 85,000 drivers by 2020.
- DSPs currently deliver over 10 million parcels to the company on a daily basis according to the company in a announcement.
If the data is compiled annually, it would mean that DSPs deliver around between 45% and 50% of Amazon’s total volumes in the range of 8.17 billion packages, as calculated by the MWPVL International Corporation. in 2021, stated Marc Wulfraat, president of the company that provides logistics consulting.
But estimates for the number of packages delivered to drivers would suggest a greater percentage according to the latest report that included 275,000 DSP drivers Wulfraat said. Amazon could be using language with care to protect data in a manner that makes calculations by external parties and estimates more challenging.
Situation of DSP lawsuits
A lawsuit that was filed against Amazon in the spring of this year by an ex- DSP firm, Kirk Amos Delivery and Courier The lawsuit claimed it was because the PPP program was instrumental in bolstering Amazon’s third-party delivery service at the time of the pandemic.
“Instead of paying DSPs fairly, Amazon relied on the federal government’s Paycheck Protection Program (PPP) to keep DSPs operational, thereby using taxpayer’s money to pay for its operations,” the suit claimed. The suit further stated that “nearly all DSPs operate at the point of operating at a loss because of Amazon’s control on the DSP program, and they rely upon PPP funds to keep them alive. Amazon recognizes this since it conducts an annual review of financials for the majority of DSPs and their accounting reports.”
Another lawsuit that is pending, filed by a former DSP company named Fli-Lo Falcon, LLC is challenging Amazon’s business relations with DSP firms, and claims the fact that Amazon “exercises near complete control” over DSPs which effectively treat them as franchises and not giving their owners the protections legally required that come with franchise designations.
Amazon’s motionto submit the lawsuit to arbitration which was opposed by the Fli-Lo Falcon is currently pending before U.S. District Court in Seattle.
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