Does The Postal Service Lose Money On Amazon
The U.Southward. Mail service generated $1.6 billion in profit from Amazon in its 2019 fiscal year, on $3.nine billion in revenue from its business with the e-commerce giant.
That'due south one of several revelations nigh the USPS in a Washington Post report Th, citing internal USPS emails and financial statements obtained by the American Oversight watchdog group through a public records request.
The numbers announced to debunk repeated claims past President Donald Trump that the U.South. Mail service loses money on Amazon whenever information technology ships a package.
President Trump has repeatedly criticized Amazon and its CEO Jeff Bezos, who owns the Washington Post, over the result. The president has called on the USPS to enhance the toll of delivering packages for Amazon.
President Trump says the U.Southward. Postal Service "accept to" enhance prices for delivering packages for Amazon.
USPS has become a focal point for Congress and the 2020 election https://t.co/sCnjaLeWXv film.twitter.com/OBMxnYS1rl
— Bloomberg (@business concern) August 17, 2020
But the documents, posted by American Oversight, betoken that Amazon does generate a profit for the USPS, in some cases at a significant rate.
"While Amazon is the USPS' largest bundle client ($3.9B of revenue in FY19), information technology represents <10% of USPS full annual acquirement, and is a high-contribution relationship (>150% price coverage in its largest production relationship)," reads one of the documents.
The document, entitled "Brief on Amazon-USPS Relationship," includes a list of "Fact-checking Statements" responding to President Trump'southward comments about Amazon during a Coronavirus Task Force Briefing.
The Postal service says the cursory appears to accept been circulated inside the Mail Office, although the author and origin aren't clear from the documents every bit made public.
This is the document that discloses the FY19 acquirement of $3.9 billion and profit (contribution) of $i.6 billion from Amazon in financial 2019.
It adds, "USPS derives incremental margin dollars from every package, for every product, for every customer. Bundle business organisation (both last-mile and full-network) represents a net comeback in profitability for USPS versus a detractor."
The U.Southward. Postal service'due south yearly loss doubled to $8.viii billion terminal yr. The memo attributes the financial challenges to unfunded regime mandates and restrictions, such every bit the requirement for equitable pricing across geographies, and obligations to pre-fund employee retirement, amid other factors.
Meanwhile, Amazon has been aggressively building up its own shipping and delivery capabilities, to supplement its employ of the USPS and UPS, the company says.
A new written report Thursday from analyst Mark Mahaney at RBC Capital Markets says Amazon could reduce its shipping costs by relying more on its own logistics and delivery networks, known in the industry every bit "AMZL."
The report says Amazon "will shortly be handling delivery from desktop to doorstop for 85% of all its packages," roofing 70% of U.South. households.
"Nosotros estimate that Amazon could save $two-$6B in last mile delivery costs, by farther expanding its AMZL network," the report says. "Amazon will be able to reduce its reliance on [third-party] services like USPS (xxx% of '19 AMZN U.South. deliveries) and UPS (20%) which mitigates risk of potential supplier cost increases."
Other documents reported by the Washington Post depict tension between Amazon and the U.Due south. Postal Service in contract talks. According to the Post written report, the documents reflect Amazon's doubtfulness over the status of the U.S. Mail Office. They list questions from the company such every bit, "What does the USPS await similar in the new few weeks, the side by side few months and the next several years?"
In response to a GeekWire inquiry, Amazon said information technology had no further annotate beyond its argument in the Post story: "For more than two decades, Amazon has partnered closely with the United states Postal Service to invent and deliver for our customers, which has resulted in pregnant revenue for the USPS and thousands of American jobs. USPS continues to exist a great partner in serving Amazon customers."
Equally of Th afternoon, American Oversight says the USPS has asked the group to pull down the records that the agency produced under public records laws, "claiming they had been improperly released." Run across its site for the latest.
Does The Postal Service Lose Money On Amazon,
Source: https://www.geekwire.com/2020/internal-documents-say-u-s-postal-service-made-1-6b-profit-amazon-fy2019/
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