Amazon’s aggressive expansion into rural America could pose a significant threat to the United States Postal Service (USPS), as the e-commerce giant aims to deliver 90% of its parcels independently.
Amazon’s Rural Expansion
Amazon has been steadily extending its reach into the remote corners of America, aiming to deliver packages faster to rural customers. This move represents the company’s final frontier in achieving ultrafast delivery across the U.S. Traditionally, customers in smaller towns have relied on USPS for deliveries, given its mandate to serve all U.S. addresses. However, Amazon’s increasingly speedy deliveries are outpacing USPS, leading to a shift in market share.
Over the past few years, Amazon has been discreetly enhancing its network to cater to more rural areas. This expansion includes the development of highly efficient warehouses, contracted drivers, and partnerships with local businesses.
The Strategy Behind the Expansion
Amazon’s rural focus stems from the growing demand in these remote areas. The company anticipates that offering faster delivery to rural customers will boost their purchasing frequency. By increasing its volume, Amazon aims to counterbalance the higher delivery costs with the fees it charges its sellers.
This strategy aligns with Amazon’s goal of self-delivering 90% of its parcels. To achieve this from its current two-thirds, Amazon may need to penetrate new markets, such as rural America.
USPS Unfazed by Amazon’s Moves
Despite Amazon’s assertive expansion, USPS remains confident. A USPS spokesperson highlighted the postal service’s infrastructure, which allows daily package delivery to every address at an affordable rate, a feat challenging for competitors to match.
However, Amazon believes it can deliver its packages more efficiently than USPS and will do so if possible. As Amazon extends its reach into rural areas, USPS has lengthened mail delivery times under a current restructuring program.
The Role of Walmart
Amazon’s rural strategy is likely influenced in part by Walmart, its main competitor. Walmart has thousands of retail stores in rural areas, which it increasingly uses to fulfill e-commerce orders. Walmart has also been introducing a service called GoLocal, which delivers packages for other retailers “anywhere in the U.S.” through third-party delivery firms.
Amazon’s rural expansion includes cities like Duluth, MN, where it plans to open its first delivery site in an industrial park area, formerly a large steel plant site. Currently, USPS delivers about 8% of Amazon parcel deliveries, many of which are to rural areas.
