Internet retailer Amazon.com Inc. (NASDAQ: AMZN) is reportedly ready to give up the services of the U.S. Postal Service to deliver goods in rural areas. To do this, the company intends to launch its own delivery service.
Currently, the U.S. Postal Service (USPS) is one of the main elements providing the delivery of the last mile for Amazon. According to Android Headlines reports, USPS delivered 1.54 internet retailer parcels in 2019, representing approximately 30% of all USPS parcels. Amazon paid USPS nearly $4 billion for these deliveries.
Now Amazon is committed to completely removing USPS from the delivery process with a new program called Wagon Wheel. As part of this program, the online retailer will provide deliveries in rural areas. Amazon has not yet confirmed this information. However, the words of Amazon’s management at the time of publication of the third quarter results can be an indirect confirmation of possible changes. At the time they confirmed the intention not to reduce the cost of delivery, but on the contrary – to increase them.
There is no detailed information yet, so it is difficult to estimate how large-scale investments will be required from Amazon to organize its own delivery system. But there are positive aspects to this decision of the company. In doing so, Amazon may not just opt out of USPS services, but even become its competitor in rural areas, providing delivery to third-party providers.
This may become a new line of business, as e-commerce is on the rise, and the demand for delivery will only increase. This will further increase the size of internet giant, but the company has long been the focus of regulatory authorities, who have taken notice of the ever-expanding scale and reach of the e-commerce and cloud computing giant.