Why Amazon and Rival Retailers Are Uniting to Defend the U.S. Postal Service

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While most retailers may be warring with Amazon over many things, as this Forbes piece explains, it seems that there is at least one thing they can agree on; the US Postal Service is still vital to the survival and success of their businesses.

Aug 5, 2018 – Forbes
Why Amazon and Rival Retailers Are Uniting to Defend the U.S. Postal Service

Many U.S. retailers may hate and fear Amazon.com, but their shared interest in making sure the U.S. Postal Service continues to offer “reliable and affordable” package delivery — critical to all retailers in this age of growing e-commerce — tops all that regular business enmity.

Amazon and the National Retail Federation, the top retail trade group, which represents retailers including Walmart and Target, have joined with other individual retailers and businesses to create the Package Coalition, a lobbying group seeking to educate and give facts about the state of the USPS’s package business.

“Here are the realities of the Postal Service’s packaged business: It is one of the very few bright spots of the U.S. Postal Service,” John McHugh, chairman of The Package Coalition, said in an interview, adding that while the USPS in aggregate has posted losses, the package segment contributed $7 billion to its bottom line last year. “All of our members provide solid financial footing to the Postal Service. The last thing you want to talk about is disrupting one of the few bright spots of the Postal Service.”

Just How Important Is The Postal Service In Rural Markets?

“The U.S. Postal Service has 157 million delivery points,” McHugh said. “No other organization in America has that kind of reach and penetration. Particularly in rural environments, it’s absolutely essential. In the era of e-commerce, it’s even more crucial. For rural community residents and small businesses, the only way they can afford to get that is through the Postal Service.”

Some 24,000 zip codes, representing more than half of the 42,000 zip codes in the U.S., are assigned to the rural areas, he told me.

When you total up the USPS’s deliveries to both rural residential and rural business addresses, its rural penetration was about 28% of the 157 million delivery points, according to data in the USPS’s fiscal 2017 annual report.

Even though Amazon and other large package shippers get a bulk rate from the USPS, their package volume still has to not only cover the USPS’s cost but also contribute to its other overhead, McHugh said.

“We enabled America’s continuing e-commerce growth by giving customers unprecedented visibility and competitive shipping solutions that reach every door in America every delivery day,” Megan Brennan, the postmaster general and the USPS’s CEO, said in the annual report, adding that the Postal Service is “self-funded” and “receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.” Read More

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