Amazon’s brilliant plan to rescue the Postal Service and disrupt the shipping industry

November 11, 2013

Empty crates sit next to a U.S. Postal Service mailbox in New York, on Thursday, Nov. 15, 2012. (Victor J. Blue/Bloomberg)

For most people, waiting at home for a package to be delivered is largely infeasible during the workweek, leaving Saturday as their best hope for catching the parcel truck. But thanks to Amazon, consumers can now get their e-commerce shipments on Sundays, too.

The shift is great news for online shoppers. It's likely to be even better for the U.S. Postal Service, the unlikely agency responsible for those weekend deliveries.

In case you haven't heard, the Postal Service is in trouble. The service's losses have already amounted to $3.9 billion this year, thanks in part to a legal requirement that it funnel vast amounts of money into a health pension program for its workers every year. Another problem? People are sending less mail. By the end of the decade, according to a federal study, mail volumes will be about where they were in the 1980s.

Amazon could have offered to pay the Postal Service for carrying more of its packages generally, and USPS would have gotten a much-needed injection of cash. That's not what the deal is about, though. What makes the Amazon agreement so marvelous is the way it turns the symbol of a bygone era into an actual agent of disruption.

By launching Sunday deliveries, the Postal Service has moved to where its longtime competitors aren't. Hardly anybody in any industry delivers on Sunday, with the exception of newspapers. As a business idea, this makes total sense — and while USPS doesn't exactly threaten FedEx or UPS, it might cause those companies to strike agreements with other e-commerce businesses. The deal will effectively shake up the shipping industry.

The other reason it's disruptive? This is one of the few cases we've seen of what we'll call reverse contracting — when the private sector hires a government agency to fill its need rather than the other way around. We haven't seen much of this, in part because there are so few publicly run, consumer-facing services like USPS at the federal level. There's Amtrak, the Corporation for Public Broadcasting, and a handful of others. But the pact between Amazon and USPS might open the door to further reverse contracting. If this venture takes off, Amazon may unintentionally wind up pioneering a new model for public-private partnerships.

The deal with Amazon won't single-handedly save USPS. And at this point, officials from both parties are keeping quiet about the terms of the agreement. But it puts the Postal Service in an aggressive posture that's as refreshing as it is surprising.

Disclosure: The founder and CEO of Amazon.com Jeff Bezos also owns The Washington Post.

Brian Fung covers technology for The Washington Post.
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