By Jason Sethre
Publisher
Fillmore County Journal
jason@fillmorecountyjournal.com
The United States Postal Service ended the 2025 fiscal year with approximately $80.5 billion in revenue, a 1.2% increase over 2024.
In 2025, Amazon represented $6 billion of the USPS total revenue — less than 7.5% of the operating income pie chart.
I was actually surprised to learn that Amazon’s financial contribution to the USPS was only 7.5%. It seems to me that our local USPS carriers spend a great amount of time, energy and resources making deliveries for Amazon. Huge packages.
Amazon’s contract with the USPS expires in October 2026. The USPS is proposing a competitive “reverse auction” for delivery capacity instead of direct deals. So, shippers like Amazon would have to bid against competitors for access to the USPS delivery system instead of having a negotiated contract.
In response, Amazon has indicated they are considering expanding their logistics network and shifting billions of packages to their own delivery system. Of course, if this happened, the USPS would lose revenue. But, is it truly feasible?
I have some thoughts to chew on as USPS leadership approaches this important decision with Amazon in October.
- If the USPS only takes in 7.5% of their revenue from Amazon, what is the actual expense of serving Amazon? What percentage of resources does Amazon consume relative to the financial gain? What if Amazon consumes 25% of the USPS resources but they only gain 7.5% in revenue? Is it worth it? Has this analysis been conducted?
- Evaluate the impact on the USPS operations without Amazon package deliveries. What if the USPS didn’t have to deliver USPS packages? How would they operate? I know our local carriers put in very long days from October through January every year, and this is all driven by the delivery of Amazon packages over the holidays.
- Can Amazon pull off setting up a system that matches the USPS? I think not. There’s an employment shortage, especially in rural markets. The USPS already has a hard time filling carrier routes in certain communities. How would Amazon be able to duplicate the system? Maybe they could do it with independent contractors like Uber. That would come with headaches, too, compared to a tried and trusted system like the USPS.
- If the USPS signs a contract with Amazon, which is likely, they better not sign a long-term deal. Three years at the most. Too much changes with respect to expenses.
- I’ve said this before and I’ll say it again. The USPS needs to look at their business model as more than a delivery system. They need outsiders with marketing and revenue-generating ideas to help them figure out new ways to make money that don’t put more pressure on their delivery system. Sell ads on their website. Sell ads on their stamps. Corporations will pay big money to be the exclusive stamp for a period of time. Work with MLB, NBA, NFL, and other professional sports team to create collector stamps with players on them. Imagine how many people would buy a Justin Jefferson stamp and never use it for postage. There are sports fans who would add these to their collections.
- One last thing to consider that has nothing to do with the Amazon contract. Why does the USPS charge for a P.O. Box located at their office, but they provide mail delivery for free? Shouldn’t it be the other way around? That’s like a pizza restaurant charging customers for dine-in but offering free delivery. What if the USPS charge $25 per year for delivery and offered free pickup for P.O. Boxes?
Over the past several decades in the business world, I’ve heard the phrase “something is better than nothing,” with respect to revenue. Not always. Those are words of desperation. USPS needs to know their worth. They’ve been undercharging for their services to Amazon for far too long. Meanwhile, the rest of us are paying a premium anytime we ship something with USPS. I get it, some people will argue that Amazon has volume-based buying power. But, the USPS is in the driver’s seat on this deal, and they have been for a very long time.
I hope the USPS stands firm in their dealings with Amazon.
Anonymous says
The post office boxes are a premium service. They are holding your mail safely and they are maintained. Mail is guaranteed to be up by a certain time during the day. You also have options for your mail to have street addressing and a signature on file to assist with deliveries requiring both.
Anonymous says
Honestly Amazon is making a colossal mistake thinking it can replace the USPS delivering a portion of their parcels. Even UPS came back after only a year.
David Willard says
Amazon is paying pennies for the service they get from USPS while giving USPS the vast majority of oversized and heavy packages. They don’t want to lose that because they know there’s no way they can handle that volume themselves. Amazon wouldn’t be able to keep drivers because of the increase in volume. Pay the USPS a fair rate and I think they would be glad to continue the partnership. They may make 6B a year from Amazon but that should probably be double. It was a bad deal for USPS from the beginning.
Anonymous says
You have brought up some good points …….I’ve always wondered why usps is delivering Amazon when ups and fed ex are ending their delivery services for Amazon. I have heard from upper usps management that usps actually loses money delivering Amazon packages. If usps stopped delivering Amazon packages a lot of costs cut be cut. Fewer clerk hours, fewer mail routes, fewer truck driver hours, postmasters could be shared between post offices resulting in fewer postmasters. USPS spends a huge amount of money, time, and energy hiring people all of which could be greatly reduced. This would also result in fewer jobs for training new workers. Pensions, health care costs, etc could be greatly reduced. Upper and middle management could be greatly reduced. The list goes on and on……..retention of employees would increase…….by getting rid of Amazon this could be a game changer for usps…..