Problems with the U.S. Postal Service have raised concerns about the November election, but they have already caused headaches for some of the 2 million Netflix customers who still receive DVDs by mail, as well as Amazon.com’s completion network .
Netflix NFLX,
, which still rents DVDs in its iconic red envelopes in addition to offering its popular streaming service, has experienced isolated delivery delays through the U.S. Postal Service, according to a person with knowledge of the company’s operations. The Postal Service remains a major strategic partner of Netflix, and the two operations are working closely together to navigate the situation, which is not expected to have a material impact on customer service or sales due to the isolated issues, the person said.
The Postal Service is in the process of removing 671 high-speed fast machines for post-sorting nationwide, which will eliminate 21.4 million items per hour of processing capabilities from the agency’s inventory. Relief could be underway with Tuesday’s statement from Postmaster General Louis DeJoy that the e – mail service is ready to handle any post-in-ballots it receives in November, and that he will make drastic changes after the election.
But with Democrats openly skeptical about that promise, such as budget cuts to mail delivery, tech companies are taking nothing for granted.
Read more:Postmaster has no intention of recovering email cuts, Pelosi says
“There has been a noticeable delay,” said Nitin Gupta, founder of One Hundred Feet Inc., a geocode app folder developer that helps delivery systems get to their locations faster. He has seen an increase in use of his company’s app, which is used by the likes of FedEx Corp. FDX,
, Uber Technologies Inc. UBER,
and Verizon Communications Inc. VZ,
, in the past few weeks.
Netflix’s DVD-by-mail service is a relatively small part of the company’s overall business, but is still popular in rural areas, where access to high-speed Internet and streaming services is limited. The DVD company reported revenue of $ 297 million in 2019 from more than 2 million subscribers, down from $ 366 million in 2018; as recently as 2012, Netflix reported more than $ 1 billion in DVD revenue. Netflix reported $ 20.16 billion in sales in 2019, so only 1.5% of that total comes from the DVD company.
The importance of rural mail delivery has intensified the bet for online retailers that ship products such as prescription drugs, groceries, jewelry and DVDs, including Amazon AMZN,
“It’s so critical for elderly people who are homebound during the pandemic, especially those who are addicted to drugs,” said Shivaram Rajgopal, a professor at Columbia Business School, MarketWatch.
Any postal service problems could affect Amazon on a larger scale, as the e-commerce giant sends billions of packages every year. However, the company has built up disruptions in its delivery network – using its own supplies together with the Postal Service and private carriers – because its products are so geographically dispersed.
Amazon Logistics, the company’s own logistics operation, “has more than doubled its share” of U.S. package volumes by about 20% in late 2018 and is now shipping at a rate of 2.5 billion a year. Morgan Stanley estimates that UPS of United Parcel Service Inc.,
and FedEx have U.S. shipping volumes of 4.7 billion and 3 billion packages per year, respectively, and that Amazon already supplies about half of its own packages in the US
By 2022, Amazon’s U.S. parcel shipping volume could more than double, to 6.5 billion, according to the Morgan Stanley report. That would easily exceed UPS’s 5 billion estimates and FedEx’s 3.4 billion package volume.
Ambassador Jeff Bezos, who as the owner of the Washington Post publicly focuses on vitriol by President Donald Trump, has put in place a large network of delivery partners to avoid bottlenecks. In addition to its only common vans that have become as common as residential carriers in residential areas, Amazon has agreements with the USPS and UPS to pursue customer service.
“We regularly balance capacity across our extensive network of carrier partners to ensure we are able to meet our delivery promises,” an Amazon spokeswoman told MarketWatch in a telephone interview. “While we do not comment on our agreements with transportation partners, we continue to consider all of our options to ensure we provide the best possible service to customers.”
That has not always translated into timely delivery for small businesses that partner with Amazon. Sharon Buchalter, CEO of Products on the Go, an e-commerce retailer of baby products and other goods, said her company has lost sales in recent weeks because Amazon was too late in processing and delivering some orders, prompting customers to to Amazon to request refunds as cancellations.
“There’s really nothing you can do if Amazon runs too late,” Buchalter told MarketWatch. “This one [slower mail] and the economic slowdown caused by the pandemic have slightly affected sales. ”
.
