Understanding Amazon’s Delivery Service Partner (DSP) Program: Basics for Entrepreneurs

Business Owner taking Inventory

With the ongoing expansion of e-commerce, Amazon’s Delivery Service Partner (DSP) program has become a well-defined avenue for entrepreneurs looking to venture into the logistics and delivery sector. This program allows individuals to run independent businesses managing last-mile delivery for Amazon, utilizing vehicles, uniforms, and software branded by the company.

This article offers a summary of the DSP model, details operational expectations, and emphasizes the legal and business considerations that entrepreneurs should be aware of before participating.

What Is the Amazon DSP Program?

Introduced in 2018, Amazon's DSP program enables individuals to establish and operate their own small delivery businesses. Participants manage drivers responsible for delivering Amazon packages on designated routes, with Amazon offering support in the form of training, technology, and continuous logistics management.

Key features of the program include:

• Startup costs are relatively low

• Delivery fleets usually consist of 20–40 vans

• Amazon offers routing software, uniforms, and fleet leasing options

Entrepreneurs aren't required to have previous logistics experience, but Amazon favors those with leadership or operational management backgrounds.

How the Business Relationship Works

While DSP owners are independent business operators, their relationship with Amazon is governed by a detailed contract. Owners agree to operate in compliance with Amazon's standards, which include:

• Route and delivery time requirements

• Branding and vehicle specifications

• Hiring, training, and retaining delivery drivers

• Performance-based evaluation metrics

This creates a quasi-franchise structure—the business is independently owned, but tightly integrated into Amazon’s systems.

Legal and Regulatory Considerations

1. Business Formation and Liability

Entrepreneurs usually establish a Limited Liability Company (LLC) or a similar legal entity to safeguard personal assets and handle tax responsibilities. It is crucial to have proper formation, governance documents, and operational planning in place before participating in the DSP program.

2. DSP Agreement

The DSP agreement from Amazon is detailed and includes clauses addressing:

• Rights regarding termination and renewal

• Service levels and performance standards

• Insurance and indemnification obligations

• Control over branding, equipment, and scheduling

It is essential to understand your responsibilities under this agreement. Consulting with legal counsel can aid in interpreting these provisions and evaluating the associated risks.

3. Employment Law Compliance

Owners of DSPs are accountable for every element of employment, such as:

• Recruitment and termination

• Managing payroll and benefits

• Adhering to state and federal labor regulations (e.g., minimum wage, overtime, workplace safety)

• Handling any claims of discrimination or harassment

The legal responsibilities as an employer can be significant and should be anticipated from the beginning.

4. Insurance and Risk Management

Amazon mandates certain commercial auto and liability insurance coverage. Business owners should also assess if additional policies, like workers' compensation, general liability, and cyber insurance, are necessary to safeguard against other risks.

5. Transportation Regulations

Delivery businesses are required to adhere to Department of Transportation (DOT) regulations, which encompass driver licensing, vehicle inspections, and reporting requirements.

Is the DSP Program a Fit for Your Business Goals?

For entrepreneurs who excel in operations and team management, the DSP program offers a structured entry into the logistics sector. Nonetheless, the substantial legal and financial obligations, along with the control Amazon maintains, may make this model unsuitable for all business owners.

Next Steps: Seeking Legal Guidance

If you are considering applying to Amazon’s DSP program or have already begun the process, it is advisable to consult with an attorney experienced in business formation, contract review, and employment law. A lawyer can:

• Assist in selecting the appropriate business structure

• Review Amazon’s DSP agreement and clarify obligations

• Ensure employment practices comply with local and federal laws

• Help you understand liability and insurance requirements

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For more information or to schedule a consultation, please contact our office at contact@mayslawyer.com. We are available to assist entrepreneurs in evaluating the legal and operational aspects of starting a delivery business through Amazon’s DSP program.

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Disclaimer: The information provided in this blog post is for informational purposes only and does not constitute legal advice. Reading or relying on this content does not create an attorney-client relationship between you and Mays Law Firm or any of its attorneys.

Starting and operating a business—whether through a program like Amazon’s DSP or otherwise—involves significant financial, legal, and operational risks, including the possibility of failure. Readers are strongly encouraged to conduct their own due diligence and consult with qualified legal, financial, and business professionals before making any decisions.