Amazon Should Make the Postal Service Its Own Personal Courier

Amazon is expanding its effort to remake the U.S. Postal Service as its very own courier. On Thursday, the online retailer said it will now offer Sunday deliveries through the post office in more than a dozen new cities, up from just two when this unique partnership started last year.

If you’re an Amazon customer, Sunday delivery may seem like a small extra perk. But the service means a lot to Amazon. Walmart and Target are open all weekend, after all. More than just competing one extra day, however, Amazon’s deal with the Postal Service speaks to the online retailer’s desire be everywhere, all the time, not just online, but also off. Perhaps Amazon can get closer to this ubiquity by riding along with the people who are already going to your door daily.

For the U.S Postal Service, the incentive is obvious: more business. The agency is losing billions, and whether that’s the fault of the internet, FedEx, or Congress, any chance to hook up with one of the country’s biggest package senders sounds like a win. And since all its sorting facilities and trucks are otherwise sitting idle on a Sunday, why not put them to work?

But Amazon may be playing a longer game. It’s hard to imagine the Postal Service doesn’t look tempting as a delivery arm to use all week long — maybe even for same-day deliveries.

Beyond FedEx

Amazon’s existing relationships with UPS and FedEx are often strained, a tension that spilled out into the open last Christmas when many holiday deliveries arrived late. To gain more control over the “customer experience” — the top priority of Amazon’s corporate culture — Amazon has been working on various versions of its own delivery service. The most visible of these is Amazon Fresh, a same-day grocery delivery service available in a few test cities that uses Amazon’s own trucks.

The main challenge for Amazon in developing its own delivery service, especially for same-day delivery, is density, explains Marc Wulfraat, president of MWPVL International, a logistics consulting firm. To make a profit delivering packages, a carrier must have enough deliveries close enough together on each route to cover the costs of the driver and the truck. And this becomes an even bigger issue with same-day delivery. If a driver has too few packages to deliver — or has to drive too far to each one — that route becomes a money-loser.

FedEx and UPS can optimize their routes to avoid these losses because they always have a steady stream of packages coming through from myriad senders, allowing them to hit the magic number of about 150 deliveries per day per driver. But a dedicated Amazon-only delivery service risks feast-or-famine scenarios where orders come in too sporadically from too many different places for the math of self-managed delivery to make sense. “If you don’t do 150 stops on the route you’re in dangerous territory,” Wulfraat says.

In a detailed blog post laying out the economics of same-day delivery for Amazon, Wulfraat concludes that the company will likely be forced to work with third-party couriers. That in itself presents its own issues, he says, since the economic inefficiency of Amazon running its own delivery service also more or less apply to any other company that becomes a dedicated Amazon-only shipper. “You can’t take an existing company easily and have them continue to do their existing business and at the same time modify around the Amazon model,” Wulfraat says.

The Third Way

But what if there were another way to ship packages, a way that didn’t depend on a private business but on a public entity with an obligation to make deliveries, regardless of snow or rain or heat or gloom of night? Oh right, that does exist, and it makes a stop about once a minute at the door of everyone in the country.

Wulfraat is skeptical that Amazon can piggy-back on the Post Service in a way that makes logistical sense. He points out that most mail sorting happens in the morning, while same-day delivery is most likely to happen in the early evening, after orders come in. If the Postal Service were to offer some kind of separate same-day delivery that used its fleets and carriers but came at a different time, he says, other retailers such as Walmart and Target would have to join in to create the needed volume of deliveries.

Still, the cities where Amazon does offer Sunday delivery — including New York, Los Angeles, Cincinnati, Dallas, Houston, Philadelphia, and San Antonio — are relatively close to at least one of the company’s fulfillment centers. If Amazon is looking to experiment with making the Postal Service a bigger part of its future plans, this deal looks like a good way to start beta-testing. In one version of the future, city streets will start to teem with trucks with Amazon logos. In another version, maybe you’ll just keep seeing the mail.

via Amazon Should Make the Postal Service Its Own Personal Courier | Business | WIRED.

Leave a Reply

Required fields are marked *