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WSJ Op-Ed: The Post Office Is Delivering Amazon's Packages Below Cost (zerohedge.com)
schwit1 shares a pay-walled op-ed from the Wall Street Journal (also excerpted at the URL below):
The U.S. Postal Service delivers the company's boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon... First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver...
My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service. It's as if Amazon gets a subsidized space on every mail truck... Congress should demand the enforcement of the Postal Accountability and Enhancement Act, and the Postal Service needs to stop picking winners and losers in the retail world. The federal government has had its thumb on the competitive scale for far too long.
My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service. It's as if Amazon gets a subsidized space on every mail truck... Congress should demand the enforcement of the Postal Accountability and Enhancement Act, and the Postal Service needs to stop picking winners and losers in the retail world. The federal government has had its thumb on the competitive scale for far too long.
Doesnt sound to different to net neutrality honestly...
They use them all. I get USPS delivered amazon stuff all the time. It sucks because the mailman can jsut put it in my mailbox (live in a condo, mailbox is detached), but everyone else has to deliver to the door.
Good-bye
The funny thing is that USPS doesn't deliver to my door. I have to go to the post office to pick up my mail. I got Prime thinking a Amazon would deliver to my door via UPS or FedEx. Since they deliver through USPS now, this makes Prime a bad deal for me, and I think I may cancel it soon.
(T>t && O(n)--) == sqrt(666)
With UPS the service is called SurePost and Fedex is SmartPost. Pickup is by UPS/FedEx and delivered to the local USPS where USPS does the final delivery.
It makes a big difference.
It's normal buisness to price marginal goods based on marginal costs + profit. Average cost includes sunk costs. The truck and postman are already going, not taking the UPS handoffs won't save a penny (which is what's going on, the whole 'Amazon' part is just clickbait).
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
UPS and FedEx uses the USPS as final delivery. SmartPost is FedEx. FedEx hands off the package at a USPS hub. Then the USPS delivers it to my PO. Amazon does not use USPS directly in my area. Secondary sellers use USPS but not Amazon. In my 20 years of ordering from them I have never received anything directly through the USPS.
Tax payers have been subsidizing the postal service and package delivery for many years. It has always been a bad idea. What's the difference if Amazon is now the main beneficiary, instead of Sears or any of the previous mail order businesses?
What really is galling is that many deliveries are made on Sundays... I've seen USPS delivery trucks going to my neighbors at both our regular residence and at our seasonal residence, on Sundays to deliver *just* Amazon packages. I often wondered how much money the USPS was making off of that kind of sweetheart deal, and now I know... We The People are subsidizing Jeff Bezos, Inc. and our normal USPS services are suffering for it.
You can bet that the letter you send to Cousin Bubba in Buttfuck, Idaho, hand-delivered, doesn't cover the costs either.
You're unique, I assure you. If you lived almost anywhere else, you'd be receiving packages by USPS. There are thousands of complaints about USPS deliveries on Amazon forums.
Out of 66 packages from Amazon this year, 60 of them have been delivered by USPS from start to finish, no SmartPost or SurePost. Nearly all of them were sold by Amazon and fulfilled by Amazon. It's a rare event when I receive a package from Amazon by UPS or FedEx.
I'm luckier than most because I have a very good post office in my city. The packages that are too big for the mailbox are left in my car (so they'll be out of sight). Plus, USPS here delivers on Sunday before lunch!
The story focuses too much on Amazon. It is a postal pricing policy that applies broadly. The fact is that if the post office has mispriced the service, it has done so for all participants, not just Amazon. This is done all too often by news outlets to pump up eyeballs on the story.
Sure, the Post Office should price its services correctly. But how do you know if it is wrong? Marginal cost is hard to estimate when you are driving the route already. And if the post office changed its pricing, it could well be that a different package last-mile business would step in. The post office is staffed with union employees, and it could be possible to beat the post office's last mile service on price if the price was raised $1.50 a package.
My stuff from Amazon comes about 75% USPS and 25% UPS.
A few years ago, Amazon used a few different local or regional carriers (can't even remember their names now) but it was only over a pretty short period of time too.
The post office is not losing money on packages from China. The Chinese government subsidizes the shipping to create those impossibly cheap rates. China has very long term goals and this is part of their master plan.
And that was an agreement negotiated by USPS, China, and eBay.
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You should support it because it's hugely useful to the country overall and it's an institution enshrined in the Constitution. We're in this together irregardless of what's benefiting to just you.
On the Oregon Cost born and raised, On the beach is where I spent most of my days
There is no rational reason that costs should be allocated equally across all classes of mail. Delivery of first class mail is the whole point of the USPS, and it is illegal for private companies to provide an equivalent service. If not for first class mail, there would be no reason to even have a post office, since there are already private alternatives for all other classes of mail. So it makes sense for FCM to bear the brunt of infrastructure costs.
Disclaimer: I believe that the historical need for FCM is obsolete and the USPS should be fully privatized. Packages should be delivered by UPS and FedEx, bills should go by email, bulk mail advertising should disappear forever.
"My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service."
If your 'available data' is 6 months old, than your 'analysis' is outdated. Amazon does not sit still. This year (the last 6 months) all the deliveries to my building (44 units) have been by Amazon employed drivers. Even my hot pizza was delivered by an Amazon driver. In the past there was a mix of UPS & USPS, mostly USPS.
However you can expect USPS to continue to handle rural deliveries, and possibly at a financial loss.
...omphaloskepsis often...
The headline and summary are deliberately misleading. Amazon takes advantage of discounts for presorting and local delivery that any entity with enough shipment volume can also take advantage of.
Apparently, those discounts are excessive. As are the discounts for junk mail.
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>subsidize...
You are forgetting the benefit to many for having the option of first class delivery to everyone, everywhere. E.g. if you want to correspond with (or sue) someone off the grid in bfe.
It sucks because the mailman can just put it in my mailbox (live in a condo, mailbox is detached), but everyone else has to deliver to the door.
Sure beats FedEx refusing to leave stuff unless I'm home to sign for it when they come -- in the middle of the day, when, like their drivers, I am also at work. Even better, there is no FedEx distribution center in my city like there is for UPS. So a "local pickup" requires a 45 minute drive.
Like many close observers of the shipping business, I know a secret about the federal government's relationship with Amazon: The U.S. Postal Service delivers the company's boxes well below its own costs.
Because the USPS is a government-funded charity with Amazon as the beneficiary? Because Bezos secretly owns the Post Office? Because Putin? Because ISIS? Is there any basis for this claim, or do we just have to accept it based on some random blogger's say-so?