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It’s becoming clearer than ever that Amazon is developing a third-party logistics service to edge out FedEx and UPS now that Stamps.com has dumped the USPS

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It’s becoming clearer than ever that Amazon is developing a third-party logistics service to edge out FedEx and UPS now that Stamps.com has dumped the USPS

The US Postal Service just got ditched for Amazon and other retailers and shipping companies.

Spencer Platt/Getty Images

  • Stamps.com announced in a call to investors on Thursday that it would end its partnership with the US Postal Service.
  • The internet postage company, which sells box labels, stamps, and other shipping services, has been partnered exclusively with USPS since 1996, when the website started.
  • As for its new partners, Stamps.com CEO Ken McBride aggressively highlighted Amazon as a major disruptor in delivery services: “We need to work with Amazon, and really everybody needs to work with Amazon.”

As the online destination to buy stamps, postal labels, and other shipping services, Stamps.com is for many synonymous with the US Postal Service.

But Stamps.com is now dumping the Postal Service.

Stamps.com, which generated $536.9 million in revenue last year, announced in a call to investors on Thursday that it would end its exclusive partnership with the agency.

Stamps.com CEO Ken McBride said the Postal Service wasn’t fit for a shipping environment that’s moving toward e-commerce.

USPS is too bogged down by government regulations and lacks the ability “to react to business trends as rapidly as it needs to do in order to keep up with the rapid pace of change in e-commerce,” he said on the call.

“The USPS is working hard to compete in the e-commerce shipping industry, but as we just mentioned they have many constituents and they have many issues to deal with that the more nimble product carriers do not,” McBride added.

The Postal Service declined to comment on this story. Amazon did not immediately respond to a request for comment.

Amazon’s infant logistics network is better than the 227-year-old US Postal Service, Stamps.com says

McBride said e-commerce is changing everything about shipping, and players such as Amazon, UPS, FedEx, regional shippers, and services such as Uber Shipping are more fit to take hold of the evolving delivery industry.

Read more: One of America’s biggest trucking companies says it will lose out on $600 million in revenues this year, and it looks like Amazon is to blame

But Amazon bests all those companies, even UPS and FedEx, which have considerably larger and more established networks. As McBride said on the call (emphasis added):

“Amazon has an amazing network they built worldwide despite only having 27 going to 40 planes … And they built it in the last few years and they’ve built it with e-commerce in mind and a lot of the other carriers have networks that are much older.

“And so, when Amazon built their network they focused on e-commerce and it’s a very powerful network and so they were going to take that network and they’re going to offer up the capacity, the excess capacity above their own packages to customers. It’s just exactly like they did with AWS.”

Right now, Stamps.com doesn’t work with Amazon in the US, but does work with Amazon in Australia and the UK. McBride said Amazon has the most competitive pricing structures.

“If we don’t bring the lowest cost solution to our customers our customers will leave and go somewhere else to get it,” he said. “So Amazon is a key strategic partnership for us to court and to have in our multi-carrier solutions.”

Sorry, FedEx and UPS: Amazon is officially a transportation company

Amazon, UPS, and FedEx have long denied that Amazon is trying to become a third-party logistics provider. But this messaging from Stamps.com makes it clear that goods that would otherwise go through USPS are fit for Amazon’s network.

Stamps.com’s customer base includes small businesses that may sell online, warehouse shippers, corporate-postage clients, and individuals looking to mail goods. Typically, Amazon would move goods only for its own customers looking to sell on the site.

Earlier this month, Amazon said in its 2018 annual filing that it competes against transportation and logistics companies. It was a clear warning to UPS and FedEx, two companies that used to say Amazon is simply their customer.

Read more: Amazon just quietly confirmed it is competing with UPS and FedEx

Amazon ships a considerable chunk of its packages through UPS, USPS, FedEx, and other delivery partners, but they’re quickly building up an in-house network.

In 2018, Amazon expanded two-day shipping availability to “almost anywhere” in the US with its additional Amazon Air capacity. It has the capacity for 100 planes in its air hub and about 10,000 branded tractor-trailers. It’s even pushing into ocean freight so it can move its goods from China to the US without any outside interaction.

“We think it’s very logical for them to improve the utilization of their network and lower their own costs by opening up to third parties,” Ravi Shanker, a Morgan Stanley analyst, told Business Insider.

Amazon is also investing in self-driving companies, such as TuSimple and Rivian, to match its interest in automating each section of the supply chain from fulfillment to deliveries.

Read more: Amazon Web Services is underpinning the technology at a $1 billion driverless trucking startup — and it shows how Amazon wants to control its supply chain and cut its $28 billion yearly shipping bill

“The fact is that Amazon has always been a logistics and supply chain company,” Michael Zakkour, vice president of global digital commerce and new retail at Tompkins International, told Business Insider. “The greatest trick that Jeff Bezos ever pulled is allowing people to believe that he wants to create the everything store. Bezos has concentrated his investments around logistics and technology.”

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