What's the Deal with Amazon Logistics?Seller Labs
Last updated: July 2019
The Amazon Logistics program can be a good investment for entrepreneurs but a bad deal for Amazon sellers and shoppers. Learn what about the program’s benefits and shortcomings for everyone involved.
Since 2005, Amazon has been delivering products to its customers by way of its own delivery service appropriately named: Amazon Logistics. The service began as a pilot program more than 10 years ago in San Francisco, Los Angeles and New York City, but has expanded to nearly every major city in the US; it is still only available in the United States.
How Amazon Logistics Works
Amazon Logistics aims to provide shoppers with an alternative same-day delivery shipping option. These perks are available for Prime members but non-members can reap the benefits for an added cost.
Deliveries are made seven days a week, throughout the day and include early mornings and late evenings, which is ideal for packages that require a signature. Delivery drivers are treated like third-party service providers who are contracted through Amazon.
Amazon has positioned the program as an investment opportunity for entrepreneurs to become Delivery Service Partners (or DSPs for short).
The basic requirements to become a DSP are:
- At least a $10,000 investment
- Responsible for hiring and developing a team
- Managing up to 40 vans and 100 employees
- Ensuring packages are delivered seven days a week and 365 days a year
For a startup cost of $10,000, Amazon projects that DSPs with 40 vans should have annual revenue figures between $1M and $4.5M and profits between $75K and $300K.
What Amazon Logistics Means for Third-Party Sellers
Shipments from Amazon Logistics appear in tracking as AMZL_US. Deliveries with this designation are sent to a specific sorting center where DSPs can pick up packages at a nearby facility and deliver goods to customers. Amazon provides drivers with a mobile application and software they can use to plan, receive route guidance and handle customer service.
Amazon Logistics relies on third-party providers, which means the level of service offered varies from one DSP to another. Whereas, providers like FedEx, UPS and USPS have a standard of service most customers are familiar with and expect.
But the Amazon Logistics delivery experience can be hit or miss, which is why this service can be problematic for third-party sellers. Shoppers’ experiences with Logistics have been a mixed bag, to say the least, ranging from over-the-top to extremely unsatisfactory experiences.
Potential Negative Implications for Sellers
The Seller Feedback score is a massive component of a third-party sellers’ success on Amazon. It contributes to winning the Buy Box and shaping a shopper’s opinion of a seller when faced with multiple options where the price isn’t a concern.
Mishandled and damaged packages can result in negative seller feedback. Fortunately for third-party sellers using FBA—or those who use Seller-Fulfilled Prime—Amazon will handle customer support and item replacement if a package is lost or damaged. And Amazon’s A-to-z Guarantee Claim protects shoppers who purchase from third-party merchants who fulfill their own products.
Unfortunately, a shopper is more inclined to share negative experiences than positive ones based on frustration and anger. And sellers can’t choose which logistics providers they want to ship their goods. So what can sellers do?
Sellers Need to Be Proactive
Sellers need to message every shopper at least once. Sellers can mitigate negative feedback and product reviews by following up with buyers. An automated Buyer-Seller Messaging system is the best way to accomplish this. In the case of mitigating risk due to a negative shipping experience because of Amazon Logistics, requesting seller feedback is the best approach.
Effective tips to getting quality seller feedback
- Time your messages effectively. You don’t want your feedback message arriving too early or late. Sending a message when a package has been marked as delivered is the best time because the delivery is most likely at the top of the shopper’s mind.
Amazon Logistics doesn’t give sellers an exact time of delivery. Sellers must use the estimated delivery time to target messages, which is usually within an hour or two of what Amazon projects.
- Give buyers options. Give the buyer multiple ways to contact you in case there is a problem and to provide a channel to leave seller feedback. Give buyers a link so they can contact you through Amazon or to give you seller feedback.
- Have a single call to action. Calls to action are traditionally located at the bottom of messages, but you can add them at the top of your email
Amazon Logistics is growing every month; we believe the service now delivers approximately 2% of all Amazon packages. Sellers need to utilize every tool available to help them succeed in the ever-changing Amazon marketplace. Proactively messaging shoppers and asking for their feedback and opinions is crucial for succeeding on Amazon.
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