[HN Gopher] Amazon is delivering nearly two-thirds of its own pa...
___________________________________________________________________
Amazon is delivering nearly two-thirds of its own packages
Author : bookofjoe
Score : 89 points
Date : 2020-08-25 17:49 UTC (5 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| skynetv2 wrote:
| No wonder I have seen severe degradation in delivery times. It is
| a minimum of 5 days now to get anything.
| noahtallen wrote:
| Anecdotally, I find that Amazon shipping (with prime) is always
| the fastest in a major urban area. My USPS and FedEx packages
| have often been delayed by several days, but Amazon mostly
| delivers on time with next day or two day shipping. Some
| "rarer" items have longer shipping times but I find they are
| still accurate.
| riku_iki wrote:
| Its because they stack popular items in local warehouses.
| Advantage of vertical integration.
| AnIdiotOnTheNet wrote:
| You don't think the global pandemic currently in progress has
| anything to do with it?
| Spivak wrote:
| I mean that could be the explanation but Amazon has been
| keeping to their 1/2 day deliveries even during the worst
| parts of the pandemic.
| el_benhameen wrote:
| Anecdotal, but my quoted Amazon delivery times here in norcal
| are now significantly worse than they were in March-June.
| This was true before everything caught on fire, too.
| jrockway wrote:
| At the start of the pandemic, things were pretty rough,
| with Amazon conveniently omitting dates on their website
| (they would say "Arriving on Tuesday!" but then you'd get
| further through the flow and it would be "Tuesday, August
| 4th"... back in April.)
|
| I wanted some more RAM this weekend, ordered it on Sunday
| morning and had it Sunday afternoon.
|
| Personally I think that everyone is a little bit too "okay"
| about the whole pandemic thing... but you can certainly buy
| stuff from Amazon and have it show up quickly.
| twblalock wrote:
| It's highly variable. I've had Prime packages take anywhere
| from 1-5 days. Just yesterday I ordered two items on Prime, one
| has already been delivered and the other one might not be here
| until the end of the week. Both items are fulfilled by Amazon.
|
| Given the substantial increase in online shopping prompted by
| the pandemic, Amazon is doing pretty well. Other retailers are
| doing much worse, including Walmart which has been the least
| reliable shipper I've bought things from.
|
| Amazon's ability to adapt while other companies are falling on
| their faces is pretty impressive all things considered.
| coldcode wrote:
| I doubt Amazon is delivering much of anything. Amazon Logistic's
| partners are delivering large numbers of packages. See "Amazon
| Delivery Service Partner". Many of those "Partners" then hire
| contractors to drive the trucks in order to meet Amazon's
| requirements and still make money. If Amazon had to pay for
| employees directly to do the deliveries then it would cost them
| much more and Prime shipping might not be worthwhile.
| Waterfall wrote:
| Why is the USPS doing so badly when e commerce is doing so well?
| Even if the post office goes away, Amazon will still keep doing
| well.
|
| In Japan they use 7/11 to do deliveries to people and pay bills
| there like a post office. Maybe we can learn from them and use
| Amazon for that.
| opportune wrote:
| Not only do they have to prefund their pensions very
| aggressively, but people dump shipments across unprofitable
| routes on the USPS because they have more uniform pricing
| milesdyson_phd wrote:
| Same in Taiwan, you can basically do everything at 7/11.
| nickthegreek wrote:
| Im guessing Amazon isn't delivering 2/3 of its rural
| deliveries.
| kube-system wrote:
| I'd guess Amazon delivers 0/3 of their rural deliveries. I've
| never seen a last-mile Amazon vehicle outside of a major
| metro.
| nybble41 wrote:
| Amazon does rural deliveries. My parents live in a rural
| area, over three miles from the nearest town (pop. 1,563),
| and yet regularly receive parcels from Amazon-branded
| delivery vehicles. They're not limited to major metros.
| vkou wrote:
| > Why is the USPS doing so badly when e commerce is doing so
| well?
|
| 1. Because their prices are uniform and fixed by legislature,
| and they are required by law to serve every part of this
| country, including remote rural areas.
|
| This means that private carriers cherry-pick profitable, high-
| volume, high-margin parts of mail delivery, while letting USPS
| handle the unprofitable, negative-margin parts of mail
| delivery.
|
| 2. Because they are actively being sabotaged by the current
| administration.
|
| 3. Because they are forced to pre-fund their pensions. If we
| required the DoD to pre-fund pensions in the same manner, their
| budget would double overnight, and four fifths of the military
| would be fired tomorrow.
| obmelvin wrote:
| > 1. Because their prices are uniform and fixed by
| legislature, and they are required by law to serve every part
| of this country, including remote rural areas.
|
| >This means that private carriers cherry-pick profitable,
| high-volume, high-margin parts of mail delivery, while
| letting USPS handle the unprofitable, negative-margin parts
| of mail delivery.
|
| This is such an important part that appears [0] to be missing
| from most recent journalism about the USPS. Unless you want
| to tell a large portion of this country "sorry, you need to
| drive X miles to pick up your own mail" someone is going to
| have to do these delivery routes. Perhaps I'm wrong, but it
| seems unlikely that a private company can serve these routes
| in a clearly fundamentally cheaper manner. There are lower
| bounds on the costs, i.e. the sparse delivery routes are real
| geography with real people, you have to physically traverse
| them to make deliveries.
|
| [0] based on my recollection
| vkou wrote:
| > Perhaps I'm wrong, but it seems unlikely that a private
| company can serve these routes in a clearly fundamentally
| cheaper manner.
|
| You're not wrong. None of the private mail carriers can
| beat USPS pricing on these routes _and_ still turn a
| profit.
| x87678r wrote:
| Amazon cherry picks the most profitable routes USPS has huge
| pensions to pay for retired staff I'm guessing it pays the
| maintenance for all the beautiful Post Office buildings across
| the country
| throwawaygh wrote:
| 2/3rds of amazon deliveries are almost certainly in a few dozen
| cities/metros. USPS absorbed not just their own costs for the
| long tail, but also everyone else's.
| Fronzie wrote:
| | Why is the USPS doing so badly when e commerce is doing so
| well?
|
| Because it's actively being sabotaged. It's staffing is held
| back by pension requirements which other parts of government
| and Amazon do not have. Their perfectly fine working sorting
| are removed.
| Alupis wrote:
| > Because it's actively being sabotaged.
|
| I know this is the political line of the day, but the reality
| is USPS is, has been, and will be insanely inefficient for
| decades. Decades. That spans multiple presidents from both
| parties. Decades.
|
| The very fact that USPS receives funding by Tax Payers, but
| also still charges the same tax payers money to use services,
| _and_ still manages to lose billions of dollars every year is
| a modern marvel all in it 's own right.
|
| The very fact it costs USPS more than $0.55 to deliver a
| letter to your mailbox (which only USPS is legally allowed to
| put mail into for whatever reason in 2020), is insane. Raise
| rates they'll say! To what end? To the point where UPS or
| FedEX rates start looking attractive for normal letter mail?
| What will happen then to the USPS?
|
| For larger packages over a few pounds, it's already insanely
| cheaper to ship packages via UPS or FedEx. Sometimes over
| half the price in difference. Neither UPS nor FedEx are
| subsidized by Tax Payers + Still Charge for Services.
| Somehow, they make a profit and deliver packages on time.
|
| The mismanagement of USPS is as criminal as it is resolute.
| It is not the current administration's doing - claiming so is
| not just intellectually dishonest, it's flatly wrong. No, the
| mismanagement of USPS has always been, and all signs seem to
| say it will always be.
|
| EDIT: It's a myth that USPS isn't tax payer funded. Pay
| attention to the wording they use - "Not Tax Payer Funded".
| That says nothing about routine bailouts[1][2][3], which are
| so routine they might as well be scheduled. How is a bailout
| not tax payer funding? Run yourself into the ground then get
| bailed out by tax payers again, and again, and again, and
| again. It would probably be more efficient to actually just
| give them the money up front.
|
| [1] https://justthenews.com/government/congress/congressman-
| says...
|
| [2] https://keller.house.gov/media/in-the-news/usps-has-
| lost-78-...
|
| [3] https://fortune.com/2015/03/27/us-postal-service/
| drewrv wrote:
| USPS has to deliver mail to every address in the country,
| whereas UPS and FedEx do not. Comparing a public service
| that handles the long tail and edge cases to private
| companies that can axe unprofitable routes (or outsource
| them to USPS) isn't a fair comparison.
| Alupis wrote:
| > USPS has to deliver mail to every address in the
| country, whereas UPS and FedEx do not
|
| Besides the fact that this isn't true (you'd be
| astonished at the number of homes that USPS won't deliver
| to, generally rural areas[1]), it doesn't preclude USPS
| from being profitable if managed properly.
|
| Let's not pretend if USPS could ditch some routes it
| would suddenly be profitable and not need billions of tax
| payer capitol injection all the time. They're a long ways
| from that.
|
| Saddled with thousands of unproductive employees, ones
| that will never be fired, yet collect a paycheck paid for
| by tax payers, and will enjoy a comfortable retirement
| with all that pension money. USPS might be a quasi-
| private company, but they sure don't behave like a
| private company.
|
| [1] I'm in the industry. For these shipments we have to
| send them FedEx or UPS, whichever is cheapest usually,
| since both will deliver when USPS will not.
| kansface wrote:
| I wonder how much of that subsidy practically goes to
| spam.
| Alupis wrote:
| I actually tried to stop the spam mail to my house.
|
| I took a mailbox full, just 2 days of mail, 99% spam, and
| took it into my local post office. Plopped the mail on
| the counter and told the clerk I no longer wanted to
| receive mail from any of these advertisers.
|
| Of course the clerk couldn't help me. USPS makes too much
| money delivering junk right to your mailbox. What a great
| system we're engineered here, where our national carrier
| service primarily slups junk mail around the country, and
| won't stop because it's one of their most profitable
| side-hustles.
| notJim wrote:
| Why would you assume that a random clerk has the ability
| to opt you out of junk mail? If you want them to do that,
| you're going to have to lobby your representatives to ban
| them from doing so, and offer another source of revenue
| that makes the USPS sustainable. I agree that this would
| be a good thing, but you already see how politically
| difficult it is to keep the USPS running at all.
| Providing it more funding so it can stop relying on bulk
| mail seems basically impossible.
| Scoundreller wrote:
| Seems like they could have been more helpful:
|
| https://faq.usps.com/s/article/Refuse-unwanted-mail-and-
| remo...
| avani wrote:
| I know you've almost certainly heard this, but USPS does
| not receive any taxpayer funding:
| https://facts.usps.com/top-facts/
| Alupis wrote:
| What is this $25 Billion Funding Bill for then[1]?
| Certainly looks like tax payer funding to me - and a
| whole lot of it too.
|
| [1] https://www.cnn.com/2020/08/22/politics/postal-
| service-house...
| mtberatwork wrote:
| That bill was only passed in the House as emergency aid.
| That doesn't mean the USPS is receiving those funds.
| Doji wrote:
| That's right, we just loan it money it'll never pay back.
| samatman wrote:
| If bailouts are your standard for "taxpayer funded", then
| in 2020, the entire US economy is now taxpayer funded.
|
| The Constitution make operating a postal service one of the
| enumerated powers. If you want to change that, I suggest
| lobbying for an Amendment.
|
| I'm sure that will be quite popular.
| mtberatwork wrote:
| The USPS does not receive tax payer funding.
| Alupis wrote:
| They receive taxpayer "bailouts" frequently, including
| this current $25 Billion bailout[1].
|
| Bailout, Funding, Potato, Potato.
|
| [1] https://www.cnn.com/2020/08/22/politics/postal-
| service-house...
| mtberatwork wrote:
| That bill was originally part of the stimulus package.
| The House separated it out to provide emergency aid to
| the USPS. Regardless, the bill won't move out of the
| house.
| Alupis wrote:
| This is only the latest "Bailout" for USPS. They have a
| history of receiving bailouts every few years.
|
| Might as well be considered direct funding, since they
| find themselves in that situation almost like clockwork.
| mtberatwork wrote:
| > This is only the latest "Bailout" for USPS. They have a
| history of receiving bailouts every few years.
|
| What history of bailouts? This "bailout" only passed in
| the House. They aren't receiving those funds.
|
| > Might as well be considered direct funding
|
| No, that's not what that term means.
|
| > since they find themselves in that situation almost
| like clockwork.
|
| No, they don't.
| kyleee wrote:
| Do you have a list of USPS bailouts by chance so we can
| check hoe frequently they occur?
| remote_phone wrote:
| Does Tesla receive taxpayer funding? Because the only
| reason why they are profitable is because of government
| credits that they sell to other companies.
| kyleee wrote:
| It sounds like the case can made, care to expound on your
| argument?
| derivagral wrote:
| I know their first "profitable" quarter was basically on
| the back of California's energy credit subsidy & 1-time
| sales thereof, but that program is over. I don't know if
| GP is referring to something more recent or ongoing.
| dumbfoundded wrote:
| USPS is a service, not a business. Do we look at how
| profitable the US military is or schools?
|
| That being said, USPS used to be profitable until Congress
| decided that they pre-fund pensions for all new hires (1).
| They went from making a couple billion a year to losing $5
| billion a year. Your statements have no truth in them.
| Republicans love to actively sabotage profitable and useful
| public services and then try to defund them by claiming
| they don't work.
|
| As a bootstrapped business owner working out of a rural and
| very republican community, I'm disgusted by the lies and
| misinformation people use to try to destroy the USPS. It's
| literally in our constitution.
|
| (1) https://www.thoughtco.com/postal-service-losses-by-
| year-3321...
| rwmurrayVT wrote:
| The larger issue is that there are a large number of
| employees who elect not to use Medicare Part B. They
| continue on the USPS health insurance plan after they
| become eligible for Medicare. That's not to mention all
| of the folks who were in the military, got a civil
| service job, and will retire at 65 with two pensions. If
| you can suck it up for twenty years in the military and
| 20 years at USPS your retirement will far exceed the
| majority of the US.
|
| https://www.forbes.com/sites/ebauer/2020/04/14/post-
| office-p...
| Alupis wrote:
| > USPS is a service, not a business. Do we look at how
| profitable the US military is or schools?
|
| If it was purely a service and designed to be in the red,
| we wouldn't be having this debate here.
|
| No, it's a quasi-private business that manages itself
| horrendously, and requires routine capitol injection via
| Tax Payer Bailouts.
|
| As a service? USPS is more of a jobs service - employing
| thousands of unproductive employees that will coast until
| retirement then enjoy part of that enormous pension.
| dumbfoundded wrote:
| So you're just going to ignore that Congress made them
| unprofitable in 2006 by requiring them to do something no
| private business has to do?
|
| Are you going to deny they were profitable before then?
|
| You say they're horribly mismanaged and only exist to
| create bureaucracy. You ignore facts and reality. It
| seems like you've made up your mind and you won't have
| reality interject. I pity you and your warped mindset.
| [deleted]
| mindslight wrote:
| The pension thing has become a talking point, but it's a
| red herring. I agree with you that the USPS needs to be
| defended, but we degrade the discourse when talking past
| each other with hyperbolic points.
|
| Most private businesses no longer operate with _defined
| benefit_ pensions, because businesses have moved on to
| _defined contribution_ retirement plans (eg 401k) which
| are inherently prefunded. Funding retirement obligations
| at the time they are accrued is a good thing, and we
| should push for more of it rather than silently indebting
| future generations.
|
| If the USPS was partially compensating workers by
| promising them a pension out of some future budget, then
| they were only profitable as long as their assumptions
| about growth held. We can accept this while still
| acknowledging USPS as a public service entitled to public
| funding, especially as needed to get through this
| accounting change.
| jkestner wrote:
| Making "profit" the benchmark for a government service,
| plus saddling the service with a pension prefunding
| requirement that takes it from profit to loss, is a
| manufactured crisis.
| kyleee wrote:
| Does "pension prefunding" mean that they have to allocate
| money up front for the (expected/forecasted) entirety of
| defined benefit pensions? Why not move to defined
| contribution plans?
| smileysteve wrote:
| > To the point where UPS or FedEX rates start looking
| attractive for normal letter mail?
|
| > but the reality is USPS is, has been, and will be
| insanely inefficient for decades
|
| Because you mention them and efficiency, here's a reminder
| that FedEx had horrible guidance in September 2019 (YoY
| from 2018 lowered guidance) leading some analysts to
| speculate towards bankruptcy; had deliverability
| reliability issues such that Amazon cut deliveries with
| them.
|
| https://www.fool.com/investing/2019/09/26/is-there-hope-
| for-...
|
| https://investorplace.com/2018/12/fedex-reported-earnings-
| an...
|
| https://www.forbes.com/sites/richardkestenbaum/2019/12/18/a
| m...
|
| And Fedex is struggling while it's workforce is free of
| pension and healthcare costs for their mostly contracted
| workforce; which has been ruled a mis-classification of
| workers
|
| https://www.reuters.com/article/us-fedex-settlement-
| idUSKCN0...
| mindslight wrote:
| > _The very fact that USPS receives funding by Tax Payers,
| but also still charges the same tax payers money to use
| services, and still manages to lose billions of dollars
| every year is a modern marvel all in it 's own right._
|
| Just like courts, building permits, transfer stations,
| vital records, DMVs, passports, and every other government
| service that charges fees (including the IRS itself!).
|
| > _For larger packages over a few pounds, it 's already
| insanely cheaper to ship packages via UPS or FedEx_
|
| USPS rates are high for anything over 12 inches on a
| dimension. Compare the prices for shipping a small package
| and you will see why many small businesses depend on USPS,
| especially ones unable to negotiate favorable contracts
| with UPS/Fedex.
| phonon wrote:
| First class mail typically costs (much) more in other
| countries.
|
| https://www.motherjones.com/kevin-drum/2020/08/us-postal-
| rat...
|
| https://gofranklingo.wordpress.com/tag/compare-postage-
| rates...
| oblio wrote:
| https://m.youtube.com/watch?v=IoL8g0W9gAQ
|
| They're not being funded through taxes.
| Alupis wrote:
| Do government bailouts not come from tax payer money?
| oblio wrote:
| 1. How many bailouts have they received?
|
| 2. Do you think it's a bailout in a year when the US is
| supposed to have mass voting by mail?
|
| 3. (whataboutism) How many (especially big) US companies
| haven't received help in 2020?
| nybble41 wrote:
| > To the point where UPS or FedEX rates start looking
| attractive for normal letter mail?
|
| That can't actually happen, because if UPS or FedEx
| delivers first-class mail they have to pay the USPS the
| normal price for the delivery _on top of_ their own costs
| (39 U.S.C. SS601). Ergo, UPS or FedEx will always be the
| more expensive option for letters. The only bright point is
| that physical letters are becoming increasingly obsolete
| with most communications taking place electronically. Now
| if we could just do something about all the physical junk
| mail...
| zonethundery wrote:
| Because volumes in its most profitable mail categories
| (marketing mail, first class mail) have fallen off a cliff. It
| would take an impossible number of parcels (at thinner margins)
| to make up for that.
|
| 6-day service, rural delivery, profitability; pick two.
| labster wrote:
| They were pretty heavily optimized for 1990, with high speed
| sorting machines for letters. I expect we actually can
| decommission some of the sorting machines, but since
| Postmaster deJoy decided to be openly political on ballot
| delays it will be impossible to tell for a while.
| me_me_me wrote:
| USPS is a service, not a business.
| ogre_codes wrote:
| What people miss here is Amazon's is taking advantage of the fact
| that the cost to deliver packages varies greatly. Where it's
| cheap/ easy to deliver packages, Amazon delivers their own. Where
| it's expensive to deliver, they outsource to UPS/ USPS/ FedEx.
| Delivering a package in rural areas where houses are a quarter
| mile apart is a lot more expensive than when a carrier can load
| up a handcart and deliver 10 addresses.
|
| Traditional carriers break even or even take a small loss on a
| percentage of deliveries because it's important to their business
| model to have consistent prices and deliver everywhere. Amazon
| isn't restricted that way, they can cherry pick which places they
| deliver based on how profitable it is to get the package to the
| doorstep.
|
| Essentially Amazon is draining away all the deliveries which made
| UPS/ USPS/ FedEx profitable. How sustainable this model is long
| term is somewhat questionable.
| bgorman wrote:
| The US should stop subsidizing rural communities. It is bad for
| the environment and people that want to live out there should
| have to pay the real costs of serving them.
|
| One possibility is to reduce the days mail is delivered to
| rural communities to cut costs.
| ppseafield wrote:
| This is already the case in some very small communities, and
| there are sometimes mail delivery volunteers. The USPS was
| already profitable but has been undermined significantly:
| opening the private option for servicing USPS mail and
| requiring pensions to be paid up front for every employee.
|
| Additionally rural communities are about 20% of the
| population, and many of these communities are around
| farmland, which of course is necessary to keep some of. It's
| much harder to live alone with just a small amount of farmers
| vs. even the smallest of communities. Should farmers commute
| to the farm just so the USPS has a slightly easier time?
| samatman wrote:
| Mail subsidy built this nation.
|
| I invoke Chesterton's Fence. You haven't demonstrated an
| understanding of why package and parcel delivery works the
| way it does; so I reject your call to dismantle it, until you
| do demonstrate that.
| bpodgursky wrote:
| Ah yes, we should just force them into the dense city
| centers. That'll improve housing affordability for all those
| urban families.
| conjecTech wrote:
| It's not as simple as thinking in terms of those first
| order effects. Mailing subsidies reduce the cost of non-
| local alternatives for goods. It can often make it
| impossible for small businesses to exist in less urban
| environments and can lead to downward spirals where rural
| communities are self-exterminating because processes like
| this consistently siphon money out of the local economy.
|
| Imagine if shipping of all consumer goods were made free.
| Amazon would be INCREDIBLY more dominant. And in fact, this
| is a large reason they started with books. The USPS has a
| special program built for a world 100 years ago called
| Media Mail which allows you to ship books for next to
| nothing. It made it impossible to run a bookstore
| profitably. Removing shipping subsidies to rural
| communities may very well create more of them and will
| definitely make them more resilient.
| asdfasgasdgasdg wrote:
| This isn't "the US" subsidizing rural communities, though.
| This is private enterprises effectively doing the same, for
| the sake of providing a flat rate shipping service. Although
| I too think that rural living is bad for the environment,
| this is not a particular case of the government subsidizing
| it.
| leetcrew wrote:
| if UPS/FedEx want to offer flat rate shipping to both
| densely and sparsely populated areas, it's on them to make
| it economic. if amazon wants to take advantage of their
| business model, I don't see anything unfair about it.
|
| USPS is a government agency though. if they ship stuff to
| rural areas below cost, that is the US government
| subsidizing rural communities. with mail still being the
| lowest-common-denominator means of communication, there is
| a public good argument for burning money to deliver
| mail/packages affordably to people in these areas. I do
| agree they should feel at least some of the cost though,
| and I also feel there is something distasteful about amazon
| exploiting this cost structure.
| formercoder wrote:
| I wonder what the cost difference would be if we reduced
| mail to 1x per week and got everyone broadband.
| Lammy wrote:
| Rural communities used to have industry and manufacturing and
| were able to contribute to our nation as a whole.
| jgalt212 wrote:
| And they shall rise again.
| Lammy wrote:
| I hope so :)
| tonyedgecombe wrote:
| Cities house half the worlds population but create 70% of the
| worlds carbon emissions. I'm not sure they are as green as
| you think.
| formercoder wrote:
| While we're on the topic of carbon emissions what's the
| footprint of the post office? Driving around junk, the
| printing of which burns carbon, with combustion engines,
| most of which is thrown away immediately.
| rossng wrote:
| I'm not sure you're comparing like-for-like. A large number
| of the people living outside cities are subsistence farmers
| in developing countries and have unsurprisingly low carbon
| footprints. There is significant lifestyle inflation as the
| rural populace move to cities.
| tonyedgecombe wrote:
| _There is significant lifestyle inflation as the rural
| populace move to cities._
|
| Exactly.
| majewsky wrote:
| How much of these cities' carbon emissions are caused by
| the manufacturing of products for people living in the
| countryside? Big factories tend to be in or near big cities
| where there is a workforce to support them.
|
| As an example here in Germany, the city of Wolfsburg has
| the original Volkswagen plant. It's so big, it's literally
| called "car city" ("Autostadt"). They certainly don't make
| cars just for Wolfsburg, or just for city dwellers.
| scarface74 wrote:
| Yeah because who needs rural America with all of their
| useless farms...
| SteveGerencser wrote:
| And city folk could pay the real cost of having their food
| grown and delivered to their doors and local stores. The
| whole issue works both directions but most people only tend
| to see their perspective. ;)
| pjc50 wrote:
| > city folk could pay the real cost of having their food
| grown and delivered to their doors and local stores.
|
| But they do. That's the market price. That and the
| subsidies.
| luma wrote:
| Another perspective is that everyone is paying for the real
| cost of having their food grown by massive agribusinesses
| through massive government handouts in the form of
| subsidies.
| majewsky wrote:
| Most people living in the countryside rely on the same food
| distribution networks that serve city dwellers, so that
| equation doesn't check out.
| zellyn wrote:
| I'm sure the holiday and other demand spikes are also extremely
| expensive. By handling the steady-state deliveries, Amazon is
| again draining away all the profitable, predictable deliveries,
| and outsourcing the expensive spikes. It's ... brilliant?
| notatoad wrote:
| like so much the big tech companies seem to do, it's
| brilliant but unsustainable. it's brilliant right up until
| the point where it kills the partner that they're abusing and
| there's nobody left to handle their spikes.
| petra wrote:
| Let's say Amazon kills Fedex, UPS and USPS. That's great!
| Now Amazon has monopoly/duopoly on logistics.
| generj wrote:
| Or right up until FedEx and UPS agree on burner phones Dec
| 1 that they aren't taking more than a pittance of the
| holiday spike traffic, leaving Amazon in the lurch.
| ogre_codes wrote:
| > It's ... brilliant?
|
| Assuming it's a steady state then it's certainly good for
| Amazon. Particularly since their competition doesn't have the
| scale to reduce costs similarly.
| jgalt212 wrote:
| > Traditional carriers break even or even take a small loss on
| a percentage of deliveries because it's important to their
| business model to have consistent prices and deliver
| everywhere.
|
| Maybe that's the case for the average walk-in, but at scale all
| of these terms are subject to negotiation.
| ogre_codes wrote:
| > Maybe that's the case for the average walk-in, but at scale
| all of these terms are subject to negotiation.
|
| I'm sure _could_ , but prior to Amazon, having a fairly flat
| rate table has been a selling point for carriers even to
| their larger customers.
| siculars wrote:
| This. Op seems to suggest pricing is fixed when shipping for
| Amazon. Without any knowledge I would be surprised if it was.
| In fact 3rd party shippers can charge whatever they want to
| deliver Amazon packages because until Amazon can deliver all
| their packages they need shipping partners.
| luckylion wrote:
| If I recall correctly, DHL (Germany's largest delivery
| company, part of the former state post system) charges
| Amazon ~2 euros, while the end user price is between 5 and
| 6 euros.
|
| It's common wisdom that most of the cost for delivery is in
| the last mile. Amazon has great leverage, because DHL
| certainly isn't making money on their deliveries - the
| intake scales with Amazon's large quantities, but the
| individual delivery does not.
|
| It's a race to the bottom between the delivery companies,
| fueled mostly by sub-sub-contractors with very low wages,
| long hours and bad conditions. DHL has seen giant growth,
| but profits are falling apart.
| nerfhammer wrote:
| it's the other way around, Deutsche Post bought DHL,
| which had been a private US company.
| majewsky wrote:
| > DHL [in Germany] charges Amazon ~2 euros, while the end
| user price is between 5 and 6 euros.
|
| Up to a certain point [1], that's actually reasonable.
| Amazon drops off entire truckloads at a time, whereas end
| users hand packages over individually at shops that have
| to pay staff and rent. So the cost of just accepting
| parcel is going to be higher for packages sent by end
| users.
|
| Side note: If I were DHL, I'd be giving Amazon a discount
| for packages that are addressed to a Packstation, since
| that cuts down on the other big cost center, the cost of
| delivering parcel on the last mile.
|
| [1] I'm not arguing that this is the difference between 2
| and 5-6 euros, but it's certainly a large part of it.
| untog wrote:
| This also applies to UPS and Fedex, actually. In rural areas
| they just hand the packages off to USPS. It's also why the
| recent debate about how profitable or otherwise USPS is misses
| the point: it isn't designed to be a profitable business, it's
| designed to deliver mail to everyone in the country.
| nybble41 wrote:
| > Delivering a package in rural areas where houses are a
| quarter mile apart is a lot more expensive than when a carrier
| can load up a handcart and deliver 10 addresses.
|
| And yet Amazon does their own deliveries in my parents' rural
| area where the houses are indeed about a quarter mile apart and
| several miles from the nearest town. Perhaps the business model
| isn't quite so one-sided as you thought? USPS has issues with
| managing their pricing, true, but UPS and FedEx are under no
| obligation to deliver packages below cost.
| supergeek133 wrote:
| It may be because there are enough consistent deliveries in
| the area to employ someone dedicated to delivery there.
| nybble41 wrote:
| Yes, naturally. That doesn't change the fact that Amazon
| _does_ handle their own deliveries in rural areas, not just
| cities. FedEx and UPS operate under the same constraints.
| ahelwer wrote:
| The parent offered rural areas as an example of where it
| might not be profitable to deliver. Not a be-all-end-all
| analysis carving up profitable and non-profitable areas.
| petra wrote:
| >> How sustainable this model is long term is somewhat
| questionable.
|
| I wouldn't worry much.
|
| What's the worst that could happen ? Amazon would need to
| invest ~$50B in their network ?
|
| They already did so since 2014. They'll manage.
| [deleted]
| jedberg wrote:
| Amazon's data is pretty precise I'm guessing. I live in a
| suburban area right next to a major city.
|
| We get a lot of stuff from Amazon, and in a single day I have
| seen the UPS guy, FedEx gal, our regular USPS postman, _and_
| the packages only USPS guy, all bringing Amazon boxes in one
| day.
| tmaly wrote:
| I think it would be great if they could source production of
| all their Amazon label products to local companies.
|
| This would be nice to help the local communities a little.
| johnwheeler wrote:
| local businesses are not going to accept chinese wages, and
| customers aren't going to pay for US or EU labor.
| Reedx wrote:
| 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.
| badRNG wrote:
| USPS does not have that leverage, they are obligated to
| provide last mile support at a loss if necessary.
| pigscantfly wrote:
| 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 wrote:
| Here is USPS's "Universal Service Obligation"
| https://www.uspsoig.gov/sites/default/files/document-
| library...
| grecy wrote:
| 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.
| dexterdog wrote:
| The problem is when a company can leverage that loophole
| to make even more money, which is what Amazon is doing.
| delusional wrote:
| Under the assumption that they are funded to provide that
| service.
| CPLX wrote:
| This is just factually incorrect. USPS does not provide to
| the door service for massive swaths of the country.
|
| I know this because as I type this I'm sitting in a house
| in a rural area of upstate NY that doesn't have USPS
| delivery. When clueless e-commerce merchants send me things
| via USPS anyways they never arrive and eventually get sent
| back.
|
| This situation is not uncommon at all.
| ogre_codes wrote:
| Maybe this is why Amazon sends a huge chunk of their
| packages via USPS. Part of the deal between the USPS and
| Amazon included some pretty big incentives to deliver
| Amazon packages on time. My wife worked for USPS for years
| and Amazon packages were given pretty high priority.
| ogre_codes wrote:
| 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.
| travbrack wrote:
| Amazon has the leverage
| aaomidi wrote:
| That doesn't really make sense to me.
| soganess wrote:
| 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 wrote:
| 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]
| atwebb wrote:
| 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).
| MuffinFlavored wrote:
| Why didn't FedEx, UPS, and USPS cut/drop prices in order to be
| competitive? They raise rates yearly like inflation but...
| shouldn't their costs be going down year over year as they grow
| larger and larger? Volume discounts, efficiency gains.
|
| I don't have data in front of me so I'm sort of pulling numbers
| out of my a __if you will but I 'm pretty sure UPS + FedEx raise
| rates about 7% year over year for all sizable shippers at pretty
| much the same time of the year. Meaning, FedEx raises rates, the
| next week, UPS raises rates.
| saas_sam wrote:
| FedEx & UPS are whole different beast vs. gov't run USPS, way
| out of my depth on that comparison. But in general, history is
| chock FULL of once-dominant, massively scaled businesses that
| decline sharply in the face of new competitors. The exact
| reasons vary. Sometimes it's people: execs, unions, culture
| being unwilling to change. Sometimes it's intrinsic
| characteristics of a business that make it impossible to adapt
| as fast as a new market entrant.
|
| The answer here is probably: software.
| throwaway5752 wrote:
| You used to pay lots of money to trade stock, and annual fees
| for credit cards!
| bronco21016 wrote:
| Software.... that's definitely Amazon's delivery advantage.
|
| Their software is ingenious in that it sends drivers circling
| my sub-division and pulling in and out of driveways to turn
| around.
|
| I don't watch FedEx and UPS trucks aimlessly wander. I wonder
| why that is.
| bigtex wrote:
| Or geofences that require the driver to be at a certain
| spot on your driveway in order to deliver the package,
| requiring a chat with Delivery support to move the geofence
| Aperocky wrote:
| If it looks crazy, it might just be the most optimized
| route.
|
| Like how google tells you to drive on a dike and then over
| some one lane dirt roads through a hill to get there 10
| minutes faster.
| toomuchtodo wrote:
| Why reduce your margins for an adversarial customer who will
| squeeze you until they build their own distribution network
| with underpaid independent contractors? There is plenty of
| shipping volume for FedEx and UPS without Amazon deliveries. I
| would also be curious what happens when Amazon delivery
| contractors are reclassified as employees, since they only
| deliver for Amazon (Fedex lost a large legal [$240MM] dispute
| over this years ago [1]).
|
| [1] https://www.reuters.com/article/us-fedex-settlement-
| idUSKCN0...
| MuffinFlavored wrote:
| > Why reduce your margins for an adversarial customer who
| will squeeze you until they build their own distribution
| network with underpaid independent contractors?
|
| Would you rather make $0 on 0 packages or "not $0" on lots of
| packages?
| Alupis wrote:
| When FedEx walked away from Amazon, people said they were
| crazy.
|
| Now, today, UPS has to bend-over-backwards to meet Amazon's
| demands for delivery days, pickup days, days worked, the
| price Amazon is willing to pay, etc.
|
| Amazon was even able to compel USPS to delivery Amazon
| packages on Sundays!
|
| Basically, UPS works for Amazon now - FedEx saw that coming,
| and saw Amazon buying up freighter aircraft and trucks, etc.
| zdragnar wrote:
| During the holiday season, my rural post office will get
| multiple semi truck loads per day, just of Amazon packages to
| deliver. Don't discount the massive volume of deliveries from
| amazon.
|
| That said, regular mail is also on the decline, significantly
| so, as more people use technology instead of pen and paper-
| bills, letters, contracts, nearly everything is going
| digital. Packages make up an increasingly significant amount
| of post office revenue.
|
| That said, anyone who pays attention to Amazon at all knows
| that they show no remorse about screwing over business
| partners by entering the same market, and Amazon has been
| doing that for awhile now.
|
| Even so, I suspect that they aren't going to bother expanding
| delivery out to where I am now- paying the post office to
| deliver is almost certainly cheaper than keeping a regular
| workforce of independent delivery drivers way out here.
| Alupis wrote:
| > During the holiday season, my rural post office will get
| multiple semi truck loads per day, just of Amazon packages
| to deliver. Don't discount the massive volume of deliveries
| from amazon.
|
| Except, when we do napkin math, it's costing USPS more
| money to deliver each of those packages than they
| collected! They would literally make money by not
| delivering packages.
|
| They aren't making money off delivering your package, no -
| they lose money. If they were making money, they would not
| need billions of capitol injection routinely.
| oblio wrote:
| Aren't they forced to lose money by law, or something
| like that?
| R0b0t1 wrote:
| They're not losing money. They make money on package
| deliveries still, last I checked. The losing money thing
| is a republican/libtertarian talking point that is
| ignoring the law mandates them to prefund pensions by 75
| years.
| losvedir wrote:
| And conversely this undue pension funding burden is a
| talking point as well. A lot of companies would be in a
| good financial position if only they didn't have to worry
| about their unfunded liabilities.
|
| Can someone clarify for me if this USPS pension thing is
| any different from any other organization that offers
| pensions? Naively, the requirement to "fund" pension
| liabilities pretty reasonable. How else do you guarantee
| pensioners they'll have something when they retire. I
| know here in Chicago we're in bad shape because of
| unfunded pension liabilities.
| oblio wrote:
| I think they're being asked to fund pensions until the
| end of time, which regular companies aren't being asked
| to.
| Alupis wrote:
| They could maybe get rid of a bunch of unproductive
| employees, keep the pension funding at the same level,
| and bring on new productive employees.
|
| It's no secret getting a job at USPS is for life. That
| should not be a thing for a supposed public "service"
| organization that's expected to not bleed money
| everywhere.
| wcfields wrote:
| As the comment above got downvoted for pointing out the
| 75 year pension pre-funding requirement, the other
| framing is to even ASK the USPS to be profitable.
|
| It's a common attack on public goods: Amtrak & USPS, but
| would never be asked of the Military or FEMA.
| Alupis wrote:
| Neither the Military nor FEMA charge for services and
| also collect tax payer funds. How could either be
| "profitable"?
|
| Amtrak and USPS both charge for services. It's reasonable
| to expect them to not hemorrhage billions of dollars
| annually as well.
|
| Further, it can be argued a private business could
| operate on USPS or Amtrak scale with greater efficiency,
| cost much much less, and even turn a profit (see SpaceX).
| oblio wrote:
| 1. SpaceX is not a community service.
|
| 2. SpaceX, one could argue, is being subsidized majorly
| by the US government, for strategic reasons. I'm pretty
| sure it would have gone bankrupt without government
| intervention.
|
| 3. Almost no passenger rail system is fully profitable,
| in the world. Just like education, it's something you
| still want because it's a community/public service.
| zdragnar wrote:
| > They aren't making money off delivering your package,
| no - they lose money. If they were making money, they
| would not need billions of capitol injection routinely
|
| This seems like a specious argument to me. I'm not
| intimately familiar with the napkin math, but I am also
| not convinced that they would ve profitable simply by not
| delivering Amazon's packages. Their costs continue to
| rise every year- new addresses, inflating gas, healthcare
| and pension expenses- while their primary revenue stream
| (posted mail) has been continually declining.
|
| Add to that the fact that the USPS still has to go by
| every address every day, and so the last mile costs are
| relatively fixed; the only additional cost to them for
| delivering is the internal sorting and movement
| investments needed to handle the volume. Nobody
| _actually_ knows the rates amazon and USPS have
| negotiated, but outside of Trump I have not seen many
| people argue that they are losing money on the deal- most
| seem to believe that it is a win-win scenario.
| Waterfall wrote:
| I think it had more to do with contracts. I thought servers
| prices would go down but it is done in blocks of time as
| contracts. It's why itanium is still around. On scale it also
| applies to large entities not having much momentum
| treis wrote:
| >Why didn't FedEx, UPS, and USPS cut/drop prices in order to be
| competitive?
|
| Amazon retail operates at basically 0 margin. It is very
| difficult to compete with them given their scale and
| willingness to forgo profit. The writing was on the wall once
| Amazon decided they wanted to handle their own shipping. No way
| Fed Ex et.al. could be competitive on price and make money.
| ABeeSea wrote:
| This is not true. Amazon's physical retail in NA has made a
| profit for a long time.
| kooshball wrote:
| >Amazon retail operates at basically 0 margin.
|
| This may have been true in the past but it's not an accurate
| any more. Especially the way you're phrasing it like how they
| don't make any money. Profit is low because they're using the
| cash flow to make further investment. Not because each item
| sold is not making any money.
| me_me_me wrote:
| - Amazon what is your business domain?
|
| - Yes
|
| Its scary what amazon will be in the future.
| aglavine wrote:
| We need to break it.
| Florin_Andrei wrote:
| Yes. It's at the point where it can strong-arm large
| chunks of the economy. That's too much power in the hands
| of a single for-profit entity.
| asah wrote:
| Trump: Amazon should pay more to use USPS.
|
| Bezos: ok, I'll DIY.
|
| USPS: uh oh.
|
| https://www.google.com/search?q=trump+amazon+pay+more+usps
| bena wrote:
| Regardless of all that, this was the logical step for Amazon.
|
| The world's most sophisticated logistics company is WalMart.
|
| Not because they wanted to be a logistics company, but because
| by doing their own logistics, they can cut costs.
|
| Same thing with Amazon. At some point, shipping all those
| packages is your last remaining major cost (outside of
| personnel). The more you can do in-house, the cheaper you can
| do it.
|
| And that's not the only space where they've done this. AWS is
| basically Amazon selling their infrastructure. Infrastructure
| they built because at some point it was their biggest cost.
| Then they reduced that cost by bringing it in-house. Then they
| turned it into a profit center by selling it.
|
| So I don't think this is going to stop at Amazon doing their
| own deliveries. Soon enough, you will be able to ship items via
| Amazon. (This is already kind of the case with third party
| sellers on Amazon, but instead imagine treating Amazon as FedEx
| or UPS).
| oblio wrote:
| > Not because they wanted to be a logistics company, but
| because by doing their own logistics, they can cut costs.
|
| For retail, logistics is core business.
| Spivak wrote:
| It's true of large-scale retail which is really what the
| parent's point is. Small retailers just outsource their
| logistics to a company like XPO.
| Someone1234 wrote:
| At what ratio can they reduce the HUGE packaging waste?
|
| A few years ago there was an Amazon promo for when they first
| started "same day" delivery in another city, where all deliveries
| were in paper bags.
|
| But while Amazon now offers "same day" service from a warehouse
| 20 minutes away, and delivers all their own stuff, everything
| continues to arrive in huge wasteful cardboard boxes.
|
| I like Amazon, I like ordering from Amazon, but I'm tired of
| recycling entire trunks worth of cardboard boxes often holding
| very small items.
| fiftyfifty wrote:
| When ordering multiple things you can opt to have them shipped
| together to save some packaging, though it might mean an extra
| delay. I wonder if at some point Amazon will have more lockers
| available in most communities where they could deliver items
| without extra packaging and they can be safely picked up by
| only the recipient. I would be willing to go a little bit
| further to pick up my packages if it would save some
| packaging/speed up deliveries.
| alexpetralia wrote:
| I am constantly baffled by just how much cardboard is being
| used. I would be very curious to read about its environmental
| impact.
| rolleiflex wrote:
| Cardboard, per a story that was on HN a few weeks ago, is
| both almost entirely recyclable and has economic value. So
| the problem with cardboard isn't even that it's wasted, but
| that it's being stolen from trash bins for recycling.
|
| https://www.bbc.com/news/business-53724620
|
| It's one of the reminders that the invisible hand of
| economics, incentivised properly, can solve not all, but a
| surprising lot.
| sokoloff wrote:
| At some point, it seems like they need to account for the
| possibility that a given item will need to sit outside in the
| weather or in a partially secure location at a customer
| location for an unpredictable amount of time.
|
| Outer packs protect the goods not just against long-distance
| parcel shipment.
| graeme wrote:
| Prime has a thing called Amazon day, where all your orders
| arrive on the same day, unless specified.
|
| Can't use it because I'm in Canada, but would love this
| service. I'd batch it all to arrive before recycling day, and
| save my parcel receiving/unpacking efforts.
| bighitbiker3 wrote:
| I'm interested to know this as well. However I'm more
| interested to know the overall environmental impact of buying
| some from Amazon in their current state.
|
| At what distance is it overall more environmentally friendly
| for me to purchase from Amazon vs. taking my car and grabbing
| that item myself. I think I'd be surprised at how little that
| number is.
| notatoad wrote:
| https://www.buzzfeednews.com/article/nicolenguyen/environmen.
| ..
|
| it's not a direct answer, but it seems like the answer is
| that it's essentially never more environmentally friendly to
| order online, because the odds that it _actually_ eliminates
| a trip in your car are so tiny.
| kelnos wrote:
| I imagine I'm atypical, but if I had to drive somewhere to
| pick up my online orders, my monthly car trips would go up
| between one and two orders of magnitude. But I do order a
| decent quantity of things on Amazon (for non-urgent things
| I use the "Amazon day" delivery option to help reduce
| _their_ trips), and generally dislike driving and try to
| drive as little as possible (1-3 trips per week; pre-covid
| I could go weeks without driving).
|
| I'd be curious to know what the environmental numbers are
| for someone like me.
| GiorgioG wrote:
| I couldn't be happier with Amazon's delivery service. I can track
| my delivery (the tracker tells me how many stops ahead of my
| delivery, etc) and I get a picture of the package on my doorstep.
|
| USPS has been mostly reliable and yet on Saturday a package
| scheduled for delivery didn't make until Monday with no status
| change until Monday morning.
| noncoml wrote:
| Anecdotal, but the only time I am sure my Amazon package will be
| delivered correctly and on time is with USPS.
|
| Then is UPS, who are happy to stick a note on your door saying
| you were not home, even if the door is open and you are waving at
| them.
|
| Then is FedEx, who never seem to make it on time.
|
| And last/worst is Amazon, who lose or misdeliver about 20% of my
| packages.
| dexterdog wrote:
| Yeah, the random barely-trained Amazon drivers keep putting
| packages just outside my garage door. Many of them have gotten
| run over.
| kodt wrote:
| Very different near me. Fedex is the most reliable usually
| delivering before 2pm followed by UPS who will typically
| deliver before 6pm of the estimated delivery date. I get the
| best tracking details from both providers showing me where my
| package is and even a time estimate for delivery.
|
| Amazon itself is next, usually arriving on time, occasionally a
| package will be delayed and I'll get an e-mail telling me as
| much.
|
| USPS is by far the worst unless it is priority mail express.
| One thing that constantly happens is Amazon will hand off a
| package to USPS for final delivery, USPS will then mark it
| delivered on the day it is supposed to come, but won't actually
| deliver it for another 2 days. I have also had packages
| seemingly lost or stolen once being handed off to USPS
| including a very expensive computer monitor. Amazon refunded me
| of course, but it seems clear someone decided to steal it.
| Priority Mail Express service though has always been perfect.
| ghshephard wrote:
| A lot of it depends on who your Fedex ground contractor is. In
| Ann Arbor, MI, I frequently was failing to get packages that
| came via FedEx (Whoever was delivering that day may or may not
| know that it was an apartment, code) that were either (A)
| reliably delivered by Amazon without issue, or, worst case
| Amazon would contact me via phone for delivery instructions.
|
| Ironically - in _neither_ case was I dealing with either
| "Fedex" or "Amazon" - but third parties that were contracted to
| Fedex/Amazon. Amazon just had better responsiveness and
| communication.
| cogman10 wrote:
| Wholefoods was a great purchase for Amazon. I'm sure they are
| saving a TON in shipping costs.
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