If Amazon expands its network, the move would make Amazon the country’s most ubiquitous delivery service and present a blow to the Postal Service’s financial health, The Washington Post reported Thursday (Dec. 4).
Amazon’s expansion of its own delivery service would cost the Postal Service its top customer, as the tech giant is providing $6 billion, or 7.5%, of the service’s revenue for this year, the report said, citing unnamed sources.
The Postal Service plans to hold an auction early in the new year, selling access to its facilities to the highest bidder, making Amazon compete with national retail brands and regional shipping companies, according to the report.
A spokesperson for Amazon told PYMNTS the company is committed to working with the Postal Service and looks forward to hearing more from the agency soon.
“We’ve continued to discuss ways to extend our partnership that would increase our spend with them, and we look forward to hearing more from them soon, with the goal of extending our relationship that started more than 30 years ago,” the company said in a statement provided to PYMNTS. “We were surprised to hear they want to run an auction after nearly a year of negotiations, so we still have a lot to work through. Given the change of direction and the uncertainty it adds to our delivery network, we’re evaluating all of our options that would ensure we can continue to deliver for our customers.”
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A spokesperson for the Postal Service declined to comment.
Amazon has been in discussions with the Postal Service about a new service agreement without coming to an agreement, according to the Post, which is owned by Amazon founder Jeff Bezos. Now, Amazon is preparing to pull the billions of packages it sends via the service by the end of next year.
However, these plans could change, as Postmaster General David Steiner met virtually with Amazon CEO Andy Jassy Nov. 14, and the company hopes to come to an agreement, the report said.
Losing Amazon’s business could be disastrous for the Postal Service, which has recorded multibillion-dollar losses for much of the last decade. Industry groups have been working with lawmakers on a rescue package for the service, per the report.
The news comes as Amazon makes other adjustments to its delivery services. For example, the company announced earlier this week that it is testing ultra-fast delivery, in 30 minutes or less, of groceries and essential items in and around Philadelphia and Seattle.
“Amazon is utilizing specialized, smaller facilities designed for efficient order fulfillment, strategically placed close to where Seattle- and Philadelphia-area customers live and work,” the announcement said. “This approach prioritizes the safety of employees picking and packing orders, reduces the distance delivery partners need to travel, and enables faster delivery times.”
Amazon has this year been focused on speeding up delivery times amid competition from rivals such as Walmart, Target, Uber Eats and Instacart. The company announced in June it would expand next-day and same-day delivery to 4,000 towns, and in October debuted a feature letting Prime members make last-minute additions to their orders.
