Amazon Expands Fast Delivery to Rural Areas: Challenge For USPS?

Amazon Expands Fast Delivery to Rural Areas: Key Insights 

• Boosting Shipping Volume: With an advanced logistics network, Amazon aims to increase shipping volume and gain control over rural deliveries, targeting 90% of U.S. customers while reducing reliance on USPS.

• Pandemic-Driven Demand: Remote work during the COVID-19 pandemic has surged demand for Amazon's delivery services, making rural expansion both economically viable and more convenient for customers.

• Competing with Rivals: Amazon’s strategy to expand into rural areas is designed to compete with Walmart's GoLocal and Temu, bridging delivery gaps and ensuring quick access to products in remote locations to maintain a competitive edge. 

Amazon is pushing into rural America to enhance its one- to two-day delivery capabilities, aiming to increase sales in less-populated regions. 

According to a Wall Street Journal article, this move is a part of Amazon’s efforts for refining its logistics systems in urban areas. The expansion, previously unreported, targets quicker deliveries in small towns, reducing reliance on the U.S. Postal Service (USPS), which traditionally handles rural deliveries. 

Advanced Logistics for Rural Delivery 

Amazon's logistics network, surpassing UPS and FedEx in some measures, leverages hyper-efficient warehouses, contracted drivers, and local businesses to reach remote areas. The goal is to boost shipping volume and gain more control over deliveries, anticipating that faster service will drive rural consumer purchases. 

The rural push is part of Amazon's broader strategy to lessen dependence on USPS, which has been raising rates and reducing pickups. According to our data, USPS is the second most offered shipping provider by online stores in the U.S.

Pandemic Boosts Remote Delivery Demand 

Amazon’s initiative coincides with a rise in remote work and living during the COVID-19 pandemic, increasing demand for services like medicine delivery. According to Josh Lowitz, co-founder of Consumer Intelligence Research Partners, Amazon's improved delivery efficiency makes this rural expansion economically viable.

Amazon is opening smaller, optimized delivery centers closer to rural areas and enhancing automation across its network. This expansion includes small cities and towns in Arizona, Minnesota, Louisiana, and Texas. For example, Amazon is establishing a delivery site in Duluth, Minnesota, benefiting nearby areas like Ely and Grand Marais, where delivery times could be halved. 

Competition with Walmart and Temu 

The expansion also serves to compete with Walmart's GoLocal service and Temu. Amazon aims to bridge delivery gaps, ensuring that products like WaterWipes and Charmin toilet paper reach remote areas as quickly as urban centers.

As Amazon continues to grow its delivery network, it maintains a competitive edge against both traditional and emerging rivals.

Sources: Wall Street Journal, Bizrate Insights, ECDB