Amazon Delivery Service Partner businesses have become quite a popular option in the last-mile delivery business. When it comes to purchasing, selling, and reassigning Amazon Delivery Service Partner Routes, there are some specific things you want to know before you get started.
Below is a comprehensive guide to all three options and how each one works. Depending on where you are in your business journey, the options open to you might be different. Here’s how they work.
Why Purchasing, Selling, and Reassigning Amazon Delivery Service Partner Routes is Different
The business model Amazon operates under is different from that of other last-mile delivery businesses. While FedEx Ground assigns specific areas to each route owner, Amazon’s system has built-in flexibility based on volumes and Amazon’s needs.
They also have specific requirements for both drivers and business owners, and you need to be aware of those if you are a new route owner. But the good news is, once you are a part of their ecosystem and delivery team, Amazon is one of the most supportive companies out there, dedicated to helping keep you and your drivers on the road, delivering packages, and maintaining a profitable business.
With that, let’s dive right into the purchasing process.
Purchasing Amazon Delivery Service Partner Routes
Purchasing an Amazon Delivery Service Partner business involves multiple steps, and it requires careful due diligence and financial planning. Here, we’ve outlined in detail the steps you’ll need to follow:
Research and Understand the Delivery Business
Before you make any investment, you need to understand how the Amazon Delivery Service Partner business works. Service partners function, how they are related to Amazon as independent contractors, and you must have your own business and employ your own drivers. You must also either lease or purchase Amazon-approved vehicles.
Expenses include payroll, taxes, vehicle maintenance, and repair, along with other operating costs like fuel and insurance. Pay is based on the number of deliveries and the route you are assigned, but Amazon makes this pretty clear from the start. It’s just important that you understand how you will make and spend money and what you can do to improve your profits over time.
Identify a Business for Sale
Amazon itself does not typically handle the sale of businesses themselves unless you are looking to get into brand-new routes offered by Amazon. While that was once a simple process, most markets are well established, so that path to ownership is not nearly as relevant. This means you will need to find businesses on listing websites, but a better option is to use a route broker, who often has access to listings you may not find elsewhere.
Initial Contact and Screening
Once you’ve identified a potential business to purchase, reach out to the seller or the representative to express interest. Even if a broker is doing this for you, you will want to ask preliminary questions like why the current owner is selling. You’ll also want to look at the financials and the state of the existing infrastructure. This will include things like drivers and how experienced they are and the vehicles that are a part of the business.
If the business passes your initial screening and that of your route broker, you’ll then need to do a comprehensive due diligence process. This will involve going through the company’s financial statements in detail, verifying income and expenses, checking the condition of delivery vehicles and equipment, and verifying the status of the company’s relationship with Amazon. This last one is very important, as it can impact your relationship with Amazon. While these issues are often ones that can be corrected, it may be a lot of work to do so.
Once you and your broker have completed the due diligence, you’ll need to conduct a business valuation. This is a complex process that determines how much the business is worth. Usually, there is a professional team that is part of this process, including the broker, an accountant, and in some cases, an attorney if there are potential legal issues.
Negotiate the Purchase
If the business valuation lines up with the asking price (or if you believe there’s room for negotiation), you can then negotiate the terms of the purchase. This may involve adjusting the price or setting specific terms for the transfer of assets. It can also include a transition or training period, a time in which the previous owner stays on to help introduce you to customers, clients, and staff and familiarize you with the area where you will be delivering.
In most cases, you will need to secure some kind of financing. This could be through a traditional bank loan, SBA loan, seller financing, or other options, including investment partners or leveraging your own assets. This is another area where a business broker can be a big help and offer the best financing advice for your situation.
Sign a Purchase Agreement
Once you’ve agreed on a price and terms, you’ll sign a Purchase Agreement. This legally binding contract outlines the specifics of the sale. It is strongly recommended to have a lawyer review this document before signing it. It is also advisable to make sure you are absolutely certain about the purchase, as there is often a substantial penalty for canceling a purchase agreement.
Close the Sale
This is the simplest part of the process, but it can be a little nerve-wracking. With everything in place, you will finalize the transaction and take ownership of the business.
Compliance with Amazon
After you have taken over the business, you will need to ensure that it remains in compliance with Amazon’s requirements for delivery service partners. This may involve undergoing specific training, meeting performance metrics, or other tasks.
Remember, it’s important to get advice from business advisors, attorneys, and accountants during this process to ensure everything goes smoothly and to ensure you’re making a sound investment.
Next, we’ll look at this transaction from the seller’s point of view.
What if you are Selling Amazon Delivery Service Partner Routes?
Of course, the selling process when it comes to purchasing, selling, and reassigning Amazon Delivery Service Partner Routes is just the opposite of purchasing. But it is helpful to understand the process from both sides.
Determine Your Readiness
Before you begin, be sure you’re truly ready to sell and understand what this means for you, financially and personally. Consult with financial advisors, accountants, and attorneys to assess the implications, including how the sale might impact your tax situation and what you will do next. Whether that is retirement, moving on to another business or industry, or relocating, each requires a unique approach to selling your business.
Create a Sales Package
Also known as a Confidential Information Memorandum (CIM), this document should include information that potential buyers will want to know about your business. This typically includes details about finances, operations, personnel, and the market you operate in. This is often shared with a route broker who works with both sellers and buyers to ensure routes are listed properly.
Find a Buyer
You can list your business on marketplaces, but you are often better off hiring a route broker who knows the current market and may even have buyers lined up who are ready to purchase your business. You’ll want to carefully screen potential buyers for their ability to afford your business and run it successfully, and a broker can help you with that as well.
Once a potential buyer is interested and has passed your initial screening, you’ll enter negotiations. This will involve settling on a price, as well as terms and conditions of the sale, including whether or not you will stay on for a transition period and help them to learn the business before you leave it entirely in their hands.
As we mentioned above, you should expect the buyer to conduct due diligence. They will thoroughly review your financials, contracts, and other details of your business. Be prepared to provide complete and transparent information. A route broker can often help you put this information together and present it to the buyer in the most efficient way possible.
Finalize the Sale
Once both parties have agreed on the terms, you’ll sign a sales agreement. The buyer will arrange financing, and you’ll work out a transition plan. This can be a time filled with anxiety for you and the buyer, as they are embarking on a new journey, and so are you. Emotions can run high, and it is a good idea to have an intermediary like a business broker on hand to help smooth over any issues that arise.
After the transition, there may be post-sale tasks such as legal requirements, tax implications, and more. You’ll need to fulfill these obligations, and having a lawyer or accountant to guide you through this process is advisable.
Selling your Amazon Delivery Service Partner route takes a team. Don’t try to go it alone, but employ a route broker, accountant, and an attorney if needed. The process will be much less stressful as a result.
Reassigning Amazon Delivery Service Partner Routes
When it comes to purchasing, selling, and reassigning Amazon Delivery Service Partner routes, reassigning is by far the most straightforward. If you and the other party already own Amazon Delivery Service Partner routes, you can reassign them. This can be a simple as making a trade of equal or nearly equal value routes or of going through a similar process to the buying and selling ones outlined above, but without having to ensure that the buyer is qualified.
Often, if routes are not traded equally, money changes hands the same as it would in a purchase and sale situation, and all the above conditions apply. You’ll want to see financials, do due diligence, or as the assigner of the route, you will need to be ready for all the same steps.
Because it is nearly “internal,” and between those who are already route owners, the process can be a little faster than a usual purchase and sale. You may still want to employ a broker to do some of the due diligence and legwork for you, just like if you were purchasing another route.
Amazon makes this process available to ensure that routes are staffed with the most experienced and the best personnel possible.
Whether you are ready to purchase, sell, or transfer an Amazon Delivery Service Partner Route, we at Route Advisors are here to help. We’ll guide you every step of the way and make sure you get the right route at the right time and in the right location for you. Contact us today!