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I agree they are bad margin wise but it is also a solid predictable (and large) amount of money. They can make more money on other smaller shippers. The large a
by snarf21 10y ago
I agree they are bad margin wise but it is also a solid predictable (and large) amount of money. They can make more money on other smaller shippers. The large amount of revenue allows them better reach (routes/drivers) for all their customers. If Amazon drops UPS, how many jobs do they need to cut? They may have a lot more routes/drivers that make much smaller margins or (worse yet) lose money until they reallocate the work by cutting some.
I think Amazon's play (while financial) is also about control. If all shippers start charging more, they have to eat it. If they control it, they know their margins at all times and can adjust things. Also, this makes it much more likely for them to switch to a completely gig economy based model which could reduce costs in a way that UPS could likely never match, even internally.