I don't know man, you currently make $170k (in cheap Ohio) and want to leave that to start a trucking company that only deals with Amazon? Ahhh seems rather risky.
Maybe you responded this before but,
How do the drivers get paid?
Who's responsible to buy/maintain the trucks/vans?
Workers' insurance?
Warehousing?
I'll be honest, I don't know anything about Amazon's distribution, you do, so it seems like you have all the information you need. But a $170k salary is not an easy thing to replace.
So, I figured as I'd get feedback I'd end up getting more into my rationale. I kept it out of the original post because that would have made it really long.
I have gone past the point in my career where I am much more heavily invested in enjoying coming to work and not feeling berated or helpless than I am in making a certain amount of money.
I think I mentioned upthread that when I was looking for a job last, I had already crossed that point and was willing to take about a 40% cut in pay just to get back to a simpler job and cost that in to the end then deal with the never-able-to-meet demands of being a management type where you cannot hire the people you need to actually do the work and then get crapped on for not being able to figure out the impossible. I only accepted this job because the environment seemed so anti-corporate. And it was. It was heaven for 18 months. Then the owner decided to hire a CEO for the first time ever in 40+ years and the guy who came in has turned this place into.... every other place. It is massively high stress, cost chopping, do more with less standards and I get grief nearly everyday. Morale across the whole organization is miserable. Sure I get paid a lot of money, but at some point that just does not matter if you feel like crap heading out the door every day wondering what joy will greet you today. Point being, I do get $170K, but I am still planning on 10 more years of work, and there is no guarantee this job will last that long and I have much less control in the role than I did when hired. My new direct manager is also hired in from outside the company and has never has an IT department report to him, so along with his unrealistic expectations (best one was our discussion last week about how my web development manager could dare to present a project plan that took 30-60 days when he had been asked to do the work in under 14), I also have to educate him on what it really takes to do every task in our group and how it is not like on "24" or "hackers" or "CSI" or why he can download an app in 10 seconds but we need a month to write a report. Having to explain that the app he downloads still took months of work to build in the first place still does not work. So that's just a peek into my world and why walking away from $170K job to at least have the only people yelling at me be me or customers that are paying me and also to recover some autonomy in decision making and not be second guessed every five minutes is preferable. I do not have nearly enough information yet to determine if this makes sense. I have to wait to hear back on my application, and only then will the process move forward. I may be told no and then I get to keep doing what I am doing until I find another option or figure out how to make this better. I am trying to improve things every day and it still is far from unbearable, but it has been a rapid slide from pretty amazing, to well below average. Keep in mind, our VP of Distribution that I spoke with a couple days ago and who also indicated he applied likely makes more than I do. I do not appear to be the only one in our company thinking that walking away from a high paying job to a lateral move in income but one I control more of is attractive.
So for the opportunity questions. This is a stand alone business. Amazon is "assisting entrepreneurs in establishing their own logistics company". I assume there will be no legal agreement of any kind binding us together. Amazon is my customer and I am delivering their packages for them. As such, all expenses are my company's to bear, the employees, maintenance of equipment and insurance. Amazon indicates they have negotiated deals you have access to for all of these things, but that is the extent of their aide on that front. I do not have any warehousing I need to do. I am getting packages from Amazon's warehouse. There are very localized delivery companies. I am not going to be moving product from one major metro area to another. It is last mile delivery from Amazon to customer door only. I, however, do not view all that aid as insignificant. I also do not view this as necessarily (I am most certainly open to the prospect that I am wrong) to good to be true. If you apply simple supply and demand to this process, here is what I know. Amazon ships over 5 billion packages worldwide each year. That translates to north of 13 million packages a day. In talking with my UPS cousin a typical truck makes 100 stops a day and those are big UPS trucks, not these smaller vans, so guessing that would be more than enough stops. Even if I build to a full fleet of 40 vans, that is 4,000 packages a day. Not all 13 million of those packages are coming to my location of the world, but I'm thinking way more than 4,000 are. They already have multiple partners in their literature in the same metro space (two in Denver are quoted, one with 50 and one with 75 vehicles). I do not anticipate on-line shopping getting smaller any time soon. I therefore feel quite comfortable that Amazon will fill every one of my trucks I choose to place on the road every day. With the volume of partners they are targeting, we are talking tens of thousands of these vehicles around the country and hundreds of them in each metro area. Any business, say the maintenance facility negotiated with, can therefore count on a pretty stable set of work coming their way and likely is happy to give a discount to secure that work, meaning that my costs will likely be pretty competitive in a lot of areas. I still have the option to make my own choice in any area if I feel what Amazon is offering is not up to snuff. This will likely create a massive interrelated web of supply and demand relationships that stabilize the customers into any given organization and they incentivizes them to offer competitive bids. I then can take advantage of that scale and save some money.
I do get that I'd need to get up very near that $300K in profit to make this make sense. I also have confidence in my skill set that given a solid business model I could operate it in a way that I would be a top earner. I'm not viewing this as a business that competes in the same way as UPS and FedEx do with each other. I have a customer that is using be as a preferred vendor. I do not have to earn their business, they are giving it to me. I just need to meet their expectations of service levels, and that should be possible. Granted getting solid drivers will be the key and hiring good people is tough, but it is not insurmountable. I do not need to make $170K to pay my bills. I'm a Mustachian, we can do much better than that. Sure less income will slow down any savings we are able to do while we finish up the kid raising, but right now peace of mind in work is worth that trade off.
This model is also, at face value, very different in the ability to scale. You have your customer, Amazon, indicating they want you to grow as fast as possible, i.e. if I have a van they will have packages to fill it. This is a unique trait that any other business model does not provide (at least the legal ones). I may determine that is not really accurate as I get deeper. My intent is to remain skeptical throughout the process and only agree to go if and when I am comfortable with the whole view. On the risk front of only one customer, this is a valid concern. As I have looked at it I find very little upside to Amazon to not uphold their side of the deal, i.e. using me as a partner as a preferred vendor, therefore guaranteeing my income stream as much as it could ever be guaranteed in any business. Please add to anything I may have missed or shed your light on how my analysis is flawed.
Amazon will not likely shrink. All bets against this over the years have failed miserably. Amazon continues to grow and expand and eat more of the sales space. Even if they stayed flat, the demand for someone to deliver the packages is already there. I therefore see little risk of Amazon not being able to provide enough packages.
What is Amazon's alternative if they choose to walk away from partners? They would need to revert back to the current model. The current model is what drove them to decide to invest time and energy (and likely a lot of money) into building out this concept. From a logic standpoint it would seem very unlikely that Amazon does not do everything possible to support the partners.
Amazon gains more control over a risky portion of their process. I am very focused on Amazon doing well so I do well. Amazon knows that and knows that is way more loyalty than they will ever see from UPS/USPS/FedEx. It is like a Coca Cola bottler. They are all independent in each market and all they do is bottle and deliver Coke. They have one customer an they work hard to make Coke popular. Amazon knows partners will do the same, so what incentive would they ever have to tamp that down? None that I see. Down the chain you create a similar waterfall of dependency. Most, if not all, partners will likely start using all the Amazon negotiated deals for trucks, handheld devices, support service, maintenance and fuel. Those partners now have the same skin in the game. They want me to be successful so that I have trucks that keep needing service, people that need to be paid, etc. because by doing that I use their services and given them stable income. They do not have to fight for each Amazon partner to earn their repair business, they are also a preferred vendor. I likely cannot get my truck repaired for less, so I keep going to them. The whole chain does go down the path of all your eggs in one basket, but I fail to see how the chicken laying the eggs would find it better to go back to the other baskets is wants to walk away from now.
Compared to any other business model, this has one of the lowest risk profiles I have ever seen. Your hardest task, finding customers, is a non-issue. You are being handed a full load on day one. No ramp up time, no lean period to work up to speed. No significant capital investment is required. You are not buying trucks or anything expensive, which is how you can startup with five trucks for $10K or so. Amazon is simply diverting already existing package volume to partners.
My success or failure impacts Amazon's brand reputation in my area. They have skin in the game to help me be successful. My people are showing up at doors across the city in vehicles and uniforms that scream Amazon. If my people fail, Amazon is considered along with that failure. That does not currently happen as clearly with UPS etc. It will be much harder for Amazon to wipe their hands clean in this case, and to assume they have not already considered that would be foolhardy. Therefore, that leads me to believe that a lot of smart people at Amazon think this makes sense and will do everything possible to show why it does, which turns into something I can benefit from. They provide a support line to get help quickly. They are not doing this because they do not realize their head is in the chopping block along with ours. These steps clearly seem to indicate they get who our fates are tied together. One could pick a much worse company to tie their success to. A previous private company I worked for ended up having Motorola be nearly 90% of revenue. We were concerned as employees there and worked hard to diversify, but Motorola had such market share for many years that it was not possible. We got very, very well compensated through that relationship despite the "risk" of only one customer. It worked well for at least five years. Then we found others, and the experience and reputation we had built translated into much easier sales to other customers. I recall many a conversation beginning, "If you could handle Motorola's business and demands we are more than comfortable you can handle ours. When can we start working with you?" I would find it hard to believe a similar result would not be possible with Amazon and servicing their logistics.
Hope that helps with a lot more detail.
Looking forward to more discussion.