Amazon Gambles on $4B Push Into America's Rural Areas, May Soon Carry More Parcels Than USPS
In many rural areas, America's online shoppers can wait half a week or more for deliveries. But Amazon started a $4 billion "rural delivery push" last year, reports Bloomberg, and has now cut delivery times to under 24 hours for 1 in 5 rural and small-town households, with 48-hour delivery to 62% of rural households.
The payoff could be huge. Rural shoppers in the US collectively spend $1 trillion a year on clothing, electronics, household goods and other items, representing about 20% of retail purchases excluding cars and gasoline, according to Morgan Stanley. Amazon aims to recondition those shoppers to expect quick delivery, which would play to its strengths and make the company top-of-mind for online purchases... "Rural America is often overlooked," said Sky Canaves, an analyst at EMarketer Inc. who tracks online sales. "This is the opportunity Amazon is trying to seize because e-commerce growth is getting harder to come by...."
Amazon's rural push will require a lot more rural business owners willing to make deliveries... Today, Amazon delivers more parcels overall than UPS and FedEx, which are both shedding workers and shrinking their delivery networks, including in rural areas. By picking up the slack, Amazon is expected to become the largest parcel carrier in the US — surpassing the postal service — in 2028, according to the shipping software company Pitney Bowes. Amazon currently delivers two of three orders itself. For rural shoppers, the most visible change will be fewer brown UPS trucks, fewer packages delivered by mail carriers and more small business owners pulling up in their minivans.
Amazon's relationship with America's postal service "has become rocky following a dispute over contract terms," notes the Wall Street Journal. But they also share an interesting calculation by Marc Wulfraat, president of MWPVL International, a supply-chain consultancy monitoring the e-commerce company's logistics network. . At Amazon's current pace of constructing 40 to 50 new delivery hubs each year, he estimates Amazon will be able to ship packages to every single U.S. ZIP Code within four years.
The payoff could be huge. Rural shoppers in the US collectively spend $1 trillion a year on clothing, electronics, household goods and other items, representing about 20% of retail purchases excluding cars and gasoline, according to Morgan Stanley. Amazon aims to recondition those shoppers to expect quick delivery, which would play to its strengths and make the company top-of-mind for online purchases... "Rural America is often overlooked," said Sky Canaves, an analyst at EMarketer Inc. who tracks online sales. "This is the opportunity Amazon is trying to seize because e-commerce growth is getting harder to come by...."
Amazon's rural push will require a lot more rural business owners willing to make deliveries... Today, Amazon delivers more parcels overall than UPS and FedEx, which are both shedding workers and shrinking their delivery networks, including in rural areas. By picking up the slack, Amazon is expected to become the largest parcel carrier in the US — surpassing the postal service — in 2028, according to the shipping software company Pitney Bowes. Amazon currently delivers two of three orders itself. For rural shoppers, the most visible change will be fewer brown UPS trucks, fewer packages delivered by mail carriers and more small business owners pulling up in their minivans.
Amazon's relationship with America's postal service "has become rocky following a dispute over contract terms," notes the Wall Street Journal. But they also share an interesting calculation by Marc Wulfraat, president of MWPVL International, a supply-chain consultancy monitoring the e-commerce company's logistics network. . At Amazon's current pace of constructing 40 to 50 new delivery hubs each year, he estimates Amazon will be able to ship packages to every single U.S. ZIP Code within four years.
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