Impact Analysis of Amazon's Deal with USPS
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 hours ago
0mins
Should l Buy AMZN?
Source: CNBC
- Rising Shipping Costs: Amazon's plan to cut approximately 20% of packages shipped through USPS, equating to about 200 million packages annually, will lead to higher shipping costs as USPS spreads its fixed costs over fewer packages, particularly impacting rural areas.
- Declining Service Reliability: With Amazon reducing its package volume, USPS may need to raise rates for other customers or cut service levels, resulting in higher shipping costs and unreliable delivery services for rural and small businesses, thus affecting their market competitiveness.
- Unequal E-commerce Experience: According to ShipMatrix data, on-time delivery rates in rural areas are 5% to 7% lower than in urban markets, indicating that if the agreement takes effect, rural consumers will experience worsened e-commerce delivery times and service quality.
- Significant Impact on Small Businesses: Small businesses, which rely on USPS for low-cost shipping, may pass on rising shipping costs through higher prices or delivery fees, putting them at a competitive disadvantage, especially as over 60% of sales on Amazon come from third-party sellers.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 249.700
Low
175.00
Averages
280.01
High
325.00
Current: 249.700
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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