The big picture: Amazon is reportedly preparing to expand its vast delivery network and end its reliance on the US Postal Service for last-mile parcel delivery. Should it come to fruition, the postal service would lose its largest customer and enter an era of true uncertainty.
Sources familiar with the matter told The Washington Post that Amazon has provided USPS with more than $6 billion in revenue this year. That equates to around 7.5 percent of the service's total revenue last year. It goes without saying that losing a source of revenue as substantial as that would be a huge hit to the agency, and could result in major restructuring.
Nothing has been finalized as of this writing and plans could still change. Discussions remain fluid, however, as Amazon CEO Andy Jassy reportedly met with Postmaster General David Steiner as recently as November 14 to discuss the matter.
The US Postal Service has been struggling for years thanks in part to competition from couriers like UPS and FedEx. The rise of digital communication, meanwhile, means people are corresponding less via snail mail than they once did. Even as service rates have risen, revenue has fallen. In 2022, the Postal Service Reform Act bailed the agency out financially to the tune of around $107 billion over the following decade.
Amazon has been hard at work building out its nationwide delivery service, starting with its own cargo airline service in 2015. The company cut ties with FedEx for its air delivery service in 2019. Today, Amazon conducts many of its own last-mile deliveries and even employs gig economy drivers for the same purpose.
Breaking from USPS would further allow Amazon to control nearly every aspect of the purchase and delivery process, and would be welcomed by those who have had negative experiences with USPS in the past. Indeed, it'd be far easier to deal directly with Amazon regarding a delivery dispute than having to contact the USPS.
Amazon's existing contract with the USPS is set to expire on October 1, 2026.