Amazon's DSP program turned last-mile delivery into 40-van small businesses

Amazon's shipping costs ballooned from $11.5 billion in 2015 to $21.7 billion in 2017, and the company worried about relying on FedEx, UPS and the postal service to deliver Prime. In June 2018 it announced the Delivery Service Partner program: entrepreneurs run their own local delivery networks of up to 40 vans.

Each partner starts the day at one of 75 Amazon delivery stations, where algorithms decide which parcels go to these new fleets and which stay with outside carriers. Partners can begin with as little as a $10,000 investment, lease Prime-branded vehicles from Amazon, and keep control of hiring drivers — with a path to up to $300,000 in annual profit.

Amazon supplies training, volume, technology and branded vans; the partners supply local ownership and labor. Dave Clark, then head of worldwide operations, called it 'scaling cost effectively' as e-commerce growth outpaced the core carriers.

The response was huge: tens of thousands applied, including veterans and ex-athletes, Amazon expanded the program to hundreds more cities, and by September 2018 it had ordered 20,000 Mercedes-Benz Sprinters — making it the largest Sprinter customer in the world.

Franchise the last mile to locals; keep brand and routes

Entrepreneurs take on hiring and operations, so Amazon scales delivery without owning more trucks or drivers.

Local owners are motivated to hit service levels because their profit depends on it.

Guaranteed volume makes the franchise bankable even for people new to logistics.

Amazon keeps the customer relationship and brand while the partner runs the last mile.

When your growth outpaces outside carriers, build your own network — but let local operators own the trucks and staff so it scales without your balance sheet.

The DSP program became a pillar of Amazon's last-mile network alongside Flex gig work and its own trucks and planes, with the company continuing to expand it, add safety programs and offer ownership paths for partners. The model also drew scrutiny over driver conditions as Amazon pushed speed and service metrics, and other retailers studied the franchise approach to controlled local delivery.