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Nov 20

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Can Amazon.com Save the USPS

KS85115Anyone following the United States Postal Service (“USPS”) recently has heard that the organization is losing money.  There have been many plans floating around on how to decrease cost and increase revenues.  Once such plan earlier this year was to eliminate Saturday delivery.  A recent USA Today article states,

The postal service expects to deliver 420 million packages this holiday season, a 12% increase over last year, but it is in a precarious financial condition. The organization lost $15.9 billion in its last fiscal year and expects a loss of $6 billion this year.”

One new avenue to help the USPS increase its revenues is Amazon.com’s recent partnership with the USPS to deliver online orders for the retailer on Sundays.  The service will begin immediately in Los Angeles and New York  areas.  The program will be expanded in 2014 to a larger part of the U.S. market.  The USA Today article indicates why the USPS is Amazon’s first choice,

Amazon has been spending billions of dollars building new warehouses around the world so it can deliver products more quickly. The company hopes that adding Sunday as a delivery option will generate more sales….And the USPS is the only delivery service that reaches every address in the nation – 152 million homes, businesses and post office boxes.”

Amazon has been slowly revolutionizing the way people shop.  In this new online age, busy professionals can identify items they need and have them delivered to their home or place of work in as quick as a day or two.  Now with delivery options spanning seven days a week, Amazon is gearing up to rival the availability provided by brick & mortar stores.  Amazon has also started AmazonFresh, which is the online retailer’s attempt to get into the home delivered grocery market.

The USA Today article provides the following comments from the USPS,

The deal is also a welcome new source of revenue for the financially struggling U.S. Postal Service, which has been trying tap into the growth of online shopping.  ‘It will certainly help. The fastest growing segment is the package business,’ Postmaster General Patrick Donahoe said. ‘The future of package delivery is a seven-day-a-week schedule. We’ve got the capacity to do it.'”

With Amazon’s introduction of Sunday delivery, it is only a matter of time before other large online retailers follow suit.  Since the USPS has the largest reach for customer delivery, the USPS is positioned to profit from this new change.

About the author

Anand Khemlani

I am a founding member of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA), Accredited in Business Valuation (ABV), a Certified Fraud Examiner (CFE) and am a licensed Real Estate Broker. I regularly serve as an expert witness involving results of my forensic accounting assignments and damage analyses. My resume is available on Fulcrum's website

Permanent link to this article: http://betweenthenumbers.net/2013/11/can-amazon-com-save-the-usps/

1 comment

  1. Imad

    about the USPS being a bone headed iilnexfble behemoth, but I dare say that you’ll play heck getting a small package across the country for $5.15 any where else. If they go out, we’ll all be damn sorry.

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