Background

Amazon began as a small online retailer focusing on book sales in 1994. Since then they’ve emerged to become an online shopping powerhouse. According to a 2019 article by Forbes, Amazon ships 2.5 billion packages a year using its own Amazon Logistics solution. This amounts to nearly 50% of their total shipments, up from 20% just the year prior.

Additionally, Amazon Basics is a kind of store brand the company has created. This brand sells white-label products across a very wide set of markets. This label amounts to over 1500 products, and it dominates certian markets, being the best selling brand in 22 of the company’s 51 categories.

Problems

Amazon’s Growing Monopoly on Logistics

Amazon’s aggressive vertical and horizontal integration, through its Logistics and Basics arms, creates a marketplace that makes it nearly impossible for mom-and-pop small businesses to break into the $1.35 trillion domestic ecommerce market, making up nearly 7% of GDP in 2017 according to the Bureau of Economic Analysis. Worse yet, the Wall Street Journal purports that Amazon abuses its role as a third-party marketplace to collect data on successful products, only to turn around and use their massive logistics infrastructure to make cheaper alternatives under its Basics brand that it maliciously pushes higher in search results. This anticompetitive behavior also hurts consumer choice, as consumers undoubtedly end up buying Basics products not because of their quality, but because of the massive cost savings Amazon is able to realize due to their existing logistics infrastructure.

Inefficiencies Caused by Duplicated Infrastructure

Despite Amazon’s dominance, infrastructure still ends up being duplicated by different ecommerce vendors. This creates inherent inefficiencies as Amazon and other vendors (often through USPS and other private parcel services) all create their own infrastructure to move parcels across the country and deliver them to customers. Upwards of four trucks may make deliveries to a business or household in a single day due to this duplicated infrastructure. According to a paper from the Aristotle University of Thessaloniki 20% to 30% of the total greenhouse gas emissions of a city come from last mile delivery vehicles.

Amazon Logistics’ Hiring Practices

Amazon, being a profit seeking corporation, aggressivesly seeks to cut costs where possible, often at the expense of their warehouse employees. The company makes use of the dubious loophole of declaring most of their workers “contractors” in order to avoid providing them the same protections lawfully required for employees. Even for their “true” employees Amazon has shown consistent anti-employee posture, firing employees for arbitrary reasons and discouraging any kind of organizing attempts to a likely illegal degree.

Proposal: A Nationwide Logistics Service as a Branch of the USPS

Policymakers should work to amend title 39 § 101, replacing all instances of “postal services” with “postal and logistics services” and creating a chapter 7 “LOGISTICS SERVICES” with § 701 stating:

(a) The United States Logistics Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the constitution by the postal services clause, created by Act of Congress, and supported by the people. The Logistics Service shall have as its basic function the obligation to provide logistics services to bind the Nation together. The costs of establishing and maintaining the Logistics Service shall not be apportioned to impair the overall value of the service to the people.

(b) The Logistics Service shall provide a maximum degree of effective logistics services to communities. No Logistics services should be eliminated solely for operating at a deficit, it being the specific intent of the Congress that effective logistics services be insured to residents regardless of their volume.

(c) The Logistics Service shall engage with the people without reguard to the volume of their business, charging equal rates provided that the the people meet the requirements of the service as their volume increses.

(d) A Logistics Service Board shall be established to regulate the volumes at which certain requirements shall be placed upon users of the service. This board should work to ensure these regulations seek to elimnate duplication of resources, making use of the modes of transport most appropriate for the delivery.

(e) The Logistics Service shall provide logistics consulting services to assist users of the service in scaling their business beyond a certain number of monthly shipments. This number shall be established and adjusted by the Logistics Service Board.

(f) The Logistics Service should provide warehousing services at a fee based on the volume of shipment. Users above a certain volume as set by the Logistics Service Board shall be required to use this service.

Alternatives

Breaking Up Amazon

Some analysts might respond to Amazon’s monopolistic practices by working to use antitrust law to foce a breakup of the company. This is shortsighted for one main reason: centralization is efficient. In a horizontal breakup Amazon would be replaced by several smaller, but ultimately still very large, companies that would duplicate resources in competing with each other. This could potentially be addressed with geographic bounds of the baby Amazons, but that only serves to create several smaller local monopolies. Nationwide logistics would still need to be handled by some overarching intercompany service, which would hold a majority of the monopolistic power a breakup would attempt to eliminate. Indeed, the root of the problem is not centralization, but that the incentives of profit seeking companies are by their very nature counter to public good.

This would also fail to address the needs of mom-and-pop small businesses that would continue to be pushed out of the ecommerce market due to the dominance of a dozen or so large baby Amazon firms.

Regulation

Regulatory policy, being subject to the folly of the shifting tides of politics and the fiat of public executives, is inherently unstable. In comparison, state entities like the Postal Service quickly become politically infeasible to remove due to the public good they directly provide, not to mention the hundreds of thousands of jobs that they create.