Trump turns Twitter gun on Amazon

The rambling tweets made a range of accusations against Amazon, including describing the online retail giant as paying little or no taxes and using the US postal system as a ‘delivery boy’. Amazon shares fell 3.9% at one point. To put that in perspective, Amazon shares have nearly quadrupled over the last three years.

Trump’s tweets:

• I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
• While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,” and that...
• ...does not include the Fake Washington Post, which is used as a “lobbyist” and should so  REGISTER. If the P.O. “increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion.” This Post Office scam must stop. Amazon must pay real costs (and taxes) now!
• Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country...not a level playing field!
• I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!

Commenting David Jinks MILT, head of consumer research at Parcelhero said: “US President Donald Trump’s attack on Amazon is quite unprecedented and seems based on a false premise. Trump insists that the United States Postal Service (USPS) loses money on Amazon shipments. I seriously doubt that. 

"Trump claimed in a recent Tweet that the USPS would lose $1.50 (£1.07) "on average for each package it delivers for Amazon". In fact, the US Postal Regulatory Commission has consistently found that Amazon’s contracts with the USPS are profitable. Just like the British Royal Mail, the USPS has fought hard to keep its Amazon business, which has helped USPS grow its parcel business from 5% of its revenue in 2006 to 25% today.

"It’s this very success that Trump is quoting as some kind of Amazon ‘scam’ against the USPS. The USPS made a deal with Congress back in 2006 not to set its parcel prices below cost, to keep it from unfairly undercutting competitor couriers such as UPS. But the formula for calculating those costs hasn’t kept pace. The law set the share of infrastructure costs associated with packages at 5.5%, but with parcels now around 25% of revenue, analysts Citigroup says if every package delivery bore its fair share of Postal Service system costs, each box would cost $1.46 more to deliver. That’s where Trump is getting this $1.50 figure.

"But it’s USPS’s legal duty to provide universal service – just like the Royal Mail - which means that even at a discount, shipping boxes for Amazon helps it generate revenue from unused capacity. Putting fixed costs aside, USPS parcel delivery is profitable, actually helping subsidize its rural letter deliveries.

"I would suggest that Trump’s problem with the post and Amazon is actually with the Washington Post, rather than the USPS postal service! Amazon’s owner Jeff Bezos (pictured) owns the Washington Post, which is often critical of President Trump. This might be a stronger reason for Trump’s Amazon attack than any concern for the state postal service.

"Trump’s attack on Amazon hit its shares initially, but it’s difficult to see what he can do to move against Amazon. If he were to try and raise USPS parcel prices it would be counteractive in losing USPS business across the board, thereby driving up letter postage costs, and many other e-commerce businesses as well as Amazon would also suffer.

"And being a large company isn’t a crime in itself. Trump will find it hard making good another threat, to use anti-Trust laws against Amazon, providing Amazon can show that it is not colluding with other companies on prices or using price in a predatory way: driving down prices artificially and then increasing them significantly when the competition has gone. Amazon’s business model relies on low margins to be sure, but doesn’t seem to violate anti-trust laws."

This is not the first time Trump has gone for Amazon. In 2015, he made similar accusations, and Amazon boss Jeff Bezos wryly replied in a tweet:

• Finally trashed by @realDonaldTrump. Will still reserve him a seat on the Blue Origin rocket. #sendDonaldtospace