What Does Amazon's Expansion Into Rural America Mean for the USPS?

What Does Amazon’s Expansion Into Rural America Mean for the USPS?
By Dan Mooney
NAPS North Central Area Vice President

Amazon recently announced that it will spend upwards of $4 billion (with a “b”) dollars to expand delivery in rural America by the end of the year.

They will expand same-day and next-day deliveries to an additional 4,000 small towns, cities and rural communities. This rural expansion will triple their rural footprint.

Simple math says that’s an average of 80 smaller towns, cities, per state; some more, some less. This could translate into tens of millions of new customers having the ability to order from Amazon and get delivery in a day or two. The company will be using AI and advanced machine-learning algorithms to help determine what products those communities most likely will need and order.

This technology was not available a few years ago. This is a real game-changer for those communities. They will be able to get thousands of products cheaper and faster to enhance their lifestyles without having to make a trip to a larger city.

So, how will this affect the USPS? How will Amazon use the agency to fulfill this mission? On the surface, this sounds like a great opportunity for the USPS, right? For years we have delivered the “last mile” for many delivery companies.

I mean, we have the logistical network to deliver to every delivery point in America—business or residential. Historically, the USPS could make those deliveries cheaper than anyone, right? Well, guess again.

Amazon does not plan to use the USPS to achieve this new initiative and business model. It will be transforming existing rural delivery stations into hybrid hubs that serve multiple functions. Amazon also shortened the distance its deliveries have to travel to reach customers by dividing its operations and transportation networks into smaller, easier-to-serve regions and stocking more of the products our customers want locally.

This includes storing inventory on site to enable delivery within hours and preparing packages for final delivery to customers. With “Prime,” customers will be able to have unlimited access to same-day delivery if they order $25 or more with their order. This means Amazon won’t be delivering one or two items per delivery.

The profit margins on large orders make it profitable to do same-day delivery. Amazon plans on partnering with businesses (paying them) to use delivery lockers, thereby enabling its drivers to drop many deliveries at one drop point—not drive to multiple locations to make deliveries. The company plans on hiring local drivers to make deliveries. By doing all this, Amazon also is bringing jobs back into rural America.

A lot of postal employees have questioned if the agency should have been partnering with Amazon over the years. Was it profitable? As the “ice-cream man” used to say, “Is the juice worth the squeeze”?

Well, guess what. Amazon found a way to try it without using us.

The USPS can’t afford businesses to find ways of not using us to deliver packages—no matter if it’s rural or urban America. We have the network, the logistics and the vehicles to gain market share and not lose it.

We need to improve our “service” to remain competitive. If we don’t, this is what will happen. Can you imagine how many packages/revenue tens of millions of new rural customers would generate?

Something tells me if the USPS delivered those packages, we wouldn’t be looking at losing billions of dollars each year. Let’s find a way to shift delivery of those packages back to the Postal Service!

Have a great Christmas, everyone! Stay on the high road; the people and the view are much better.