Delivery Service Providers Mobilize to Drive Amazon to Raise Wages

After years of fending off allegations of labor violations at its warehouses and distribution centers, Amazon has found itself in the crosshairs of another segment of its workforce: delivery service providers.

The e-commerce titan is now being challenged by a coalition of over 2,000 small businesses that fulfill deliveries across the country, which have come together under the moniker “DSPs for Equitable and Fair Treatment,” or DEFT.

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The group, which has retained legal representation with Shumaker, Loop & Kendrick, LLP, aims to create what it sees as a more sustainable business model for the DSPs that make up Amazon’s delivery network. In their eyes, improvements are needed when it comes to wages, bonus payouts and reimbursements for vehicle usage.

DEFT, which made its public debut on Black Friday, has identified other specific areas of focus, including rate cards that keep pace with rising inflation, simplified scorecards with metrics controlled by the DSPs and added compensation for initiatives aimed at “raising the bar.”

Through its legal counsel, the group—which aims to keep its individual members anonymous, for now—will negotiate with Amazon to remediate what it sees as inadequate compensation and benefits.

This isn’t the first time Amazon has run into trouble with the DSPs; in fact, tension has been building in recent months.

Amazon was forced hit pause on a proposal to redistribute its delivery vans after the small businesses that operate them pushed back. According to a report from the Wall Street Journal, DSPs, which lease the branded delivery vans from Amazon, must pay for repairs to the vehicles before they’re returned and re-deployed. Those DSPs reported receiving subsequent surprise bills from Amazon after sending the vans back, even though they’d already paid for the repairs themselves.

With insurance and fuel costs also on the rise, the cost of doing business is mounting for DSPs. Amazon’s compensation isn’t on par with the accelerating costs, DSPs told the Journal; the company said it would increase per-package payments by just 2 cents in September, though it promised to raise the minimum wage for drivers.

DEFT, which is a chapter of the longstanding American Association of Franchisees and Dealers (AAFD), aims to advocate for higher fee increases that it sees as commensurate with the changing economic landscape.

The group’s formation follows multiple efforts (only one successful) made by warehouse workers to unionize; efforts that the company has opposed and discouraged. But workers, and especially independent support providers, continue to rise up to challenge the company. In September, the International Brotherhood of Teamsters said Amazon illegally terminated 150 union-protected third-party drivers working out of a warehouse based in Queens, New York when it cut contracts with the DSPs that employed them.

For its part, Amazon said it’s been working with a group of DSP owners to evolve the program, incorporating their feedback into the changes. The company told Sourcing Journal that it increased the profit range for prospective DSP owners to $100,000 to $400,000 per year, and is increasing its per-package rate by 20 percent beginning in January.

The web-based mega-retailer said DSPs currently have access to a number of revenue streams beyond their hourly rates and per-package rates, including compensation for training, monthly fleet payments and performance bonuses.

“The vast majority of Delivery Service Partners in our program are running successful, profitable businesses, and claims to the contrary are factually inaccurate. Our data shows DSP profitability is strong and has consistently improved year over year,” spokesperson Dannea DeLisser said. “DSPs have full control over their operations—from hiring to capacity planning and route assignments.”

DeLisser said the company has invested $16.7 billion into improvements for the DSP program over the past seven years. “These entrepreneurs are building scalable businesses that make a positive impact in their communities, and the feedback we receive reflects that success,” she added.