4 ms·

Well, UPS/etc can also cherry pick or negotiate terms if it doesn't make sense. They don't have to take those (or any) deliveries from Amazon.

by Reedx 6y ago

travbrack 6y ago
Amazon has the leverage
- aaomidi 6y ago
  That doesn't really make sense to me.
- soganess 6y ago
  Do they? If what is being said is actually true, then amazon doesn't have any leverage at all. (again if what is being argued is true) These last mile providers might be taking a small hit to deliver amazon packages, so why deliver them at all? If you answer is: "if they don't deliver these they won't get amazon's business." It would appear they are not getting any of amazon's profitable business (2/3 of delivers), so who cares about getting amazon's crap business?
  - charwalker 6y ago
    It's more that Amazon packages can comprise such a a large % of deliveries/orders that the UPS/etc may need to keep that business, even at near 0 profit, to keep their infrastructure above water. That contract possibly covers a ton of last mile region they want to cover anyway to stay competitive but couldn't keep going due to lack of volume vs cost without Amazon. It's a bit of a catch-22, they can reform their route and coverage to similarly profitable state with less coverage, potentially dooming them in the long run, or they can take the near 0 profit contract from Amazon and stay competitive while having almost no cards at the negotiation table. Amazon knows their business is huge and needed by these groups and is not afraid to point that out.
    - deleted 6y ago
      [deleted]
- atwebb 6y ago
  FDX booted them last year, their stock is way up now...there's a whole lot more to ecommerce than Amazon (though admittedly they are a huge piece).
ogre_codes 6y ago
This is why I was suggesting this might not be sustainable. Carriers have built their business based on certain assumptions. The big assumption is that customers prefer having predictable pricing. This assumption is correct for every other business they deal with, for the carriers Amazon is an aberration. Since Amazon only provides a small percentage of their business, carriers must invest significantly in building out a system for destination based pricing just for Amazon. The alternative is to simply assume all of Amazon's package traffic is going to be lowest-margin and price appropriately.
- londons_explore 6y ago
  > The alternative is to simply assume all of Amazon's package traffic is going to be lowest-margin and price appropriately. This seems like the simplist way. The company could take a sample of 100 Amazon parcels, analyze the marginal cost of delivering each (how full was each van, how much did it add to each route, etc), and use that as the basis for price negotiations with Amazon. If that means Amazon pays more than other customers, fine.
badRNG 6y ago
USPS does not have that leverage, they are obligated to provide last mile support at a loss if necessary.
- pigscantfly 6y ago
  My house is two miles down a paved road from the nearest village (800 full-time residents in the Western Sierras), and USPS doesn't deliver mail, although they do provide a free PO Box in the village. UPS and Fedex both deliver to my door. Anecdotally, your claim doesn't seem correct, but I'm not sure what the exact rules are.
  - droopyEyelids 6y ago
    Here is USPS's "Universal Service Obligation" https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-15-001_0.pdf https://www.uspsoig.gov/sites/default/files/document-library...
    - missedthecue 6y ago
      There is no set and clear definition of the Postal Service’s USO; it is generally assumed to be a collection of various laws and regulations. from the document
- grecy 6y ago
  Which is perfectly fine, because the USPS is a service, not a business. It's not supposed to be profitable anymore than the military or the EPA are supposed to be profitable.
  - delusional 6y ago
    Under the assumption that they are funded to provide that service.
  - dexterdog 6y ago
    The problem is when a company can leverage that loophole to make even more money, which is what Amazon is doing.

Well, UPS/etc can also cherry pick or negotiate terms if it doesn't make sense. They don't have to take those (or any) deliveries from Amazon.

by Reedx 6y ago

Well, UPS/etc can also cherry pick or negotiate terms if it doesn't make sense. They don't have to take those (or any) deliveries from Amazon.

travbrack 6y ago

Amazon has the leverage

aaomidi 6y ago
That doesn't really make sense to me.
soganess 6y ago
Do they? If what is being said is actually true, then amazon doesn't have any leverage at all. (again if what is being argued is true) These last mile providers might be taking a small hit to deliver amazon packages, so why deliver them at all? If you answer is: "if they don't deliver these they won't get amazon's business." It would appear they are not getting any of amazon's profitable business (2/3 of delivers), so who cares about getting amazon's crap business?
- charwalker 6y ago
  It's more that Amazon packages can comprise such a a large % of deliveries/orders that the UPS/etc may need to keep that business, even at near 0 profit, to keep their infrastructure above water. That contract possibly covers a ton of last mile region they want to cover anyway to stay competitive but couldn't keep going due to lack of volume vs cost without Amazon. It's a bit of a catch-22, they can reform their route and coverage to similarly profitable state with less coverage, potentially dooming them in the long run, or they can take the near 0 profit contract from Amazon and stay competitive while having almost no cards at the negotiation table. Amazon knows their business is huge and needed by these groups and is not afraid to point that out.
  - deleted 6y ago
    [deleted]
atwebb 6y ago
FDX booted them last year, their stock is way up now...there's a whole lot more to ecommerce than Amazon (though admittedly they are a huge piece).

ogre_codes 6y ago

This is why I was suggesting this might not be sustainable. Carriers have built their business based on certain assumptions. The big assumption is that customers prefer having predictable pricing. This assumption is correct for every other business they deal with, for the carriers Amazon is an aberration. Since Amazon only provides a small percentage of their business, carriers must invest significantly in building out a system for destination based pricing just for Amazon. The alternative is to simply assume all of Amazon's package traffic is going to be lowest-margin and price appropriately.

londons_explore 6y ago
> The alternative is to simply assume all of Amazon's package traffic is going to be lowest-margin and price appropriately. This seems like the simplist way. The company could take a sample of 100 Amazon parcels, analyze the marginal cost of delivering each (how full was each van, how much did it add to each route, etc), and use that as the basis for price negotiations with Amazon. If that means Amazon pays more than other customers, fine.

badRNG 6y ago

USPS does not have that leverage, they are obligated to provide last mile support at a loss if necessary.

pigscantfly 6y ago
My house is two miles down a paved road from the nearest village (800 full-time residents in the Western Sierras), and USPS doesn't deliver mail, although they do provide a free PO Box in the village. UPS and Fedex both deliver to my door. Anecdotally, your claim doesn't seem correct, but I'm not sure what the exact rules are.
- droopyEyelids 6y ago
  Here is USPS's "Universal Service Obligation" https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-15-001_0.pdf https://www.uspsoig.gov/sites/default/files/document-library...
  - missedthecue 6y ago
    There is no set and clear definition of the Postal Service’s USO; it is generally assumed to be a collection of various laws and regulations. from the document
grecy 6y ago
Which is perfectly fine, because the USPS is a service, not a business. It's not supposed to be profitable anymore than the military or the EPA are supposed to be profitable.
- delusional 6y ago
  Under the assumption that they are funded to provide that service.
- dexterdog 6y ago
  The problem is when a company can leverage that loophole to make even more money, which is what Amazon is doing.