Amazon, The U.S. Postal Service And The Push To Expand Same-Day Delivery

MS. DIANE REHM

10:06:53
Thanks for joining us. I'm Diane Rehm. Yesterday, Amazon announced it was partnering with the U.S. Postal Service to begin regular Sunday deliveries in New York and L.A. The move ups the ante in the world of online shopping and coincides with expanding consumer expectations for same-day delivery.

MS. DIANE REHM

10:07:17
Joining me to talk about trends in online shopping and stepped-up delivery service: Brian Fung, a reporter with The Washington Post, which is of course now owned by Amazon's President Jeff Bezos, Vicki Cantrell of the National Retail Federation, joining us from a studio at NPR in New York, Derek Thompson of The Atlantic magazine. I hope you will join us as well. Weigh in with your own thoughts, ideas. Give us a call, 800-433-8850. Send us your email to drshow@wamu.org. Follow us on Facebook or send us a tweet. Welcome to all of you. Good to have you with us.

MR. BRIAN FUNG

10:08:08
Thanks for having me.

MR. DEREK THOMPSON

10:08:09
Thank you.

MS. VICKI CANTRELL

10:08:09
Good morning. Thank you.

REHM

10:08:10
Derek, if I could start with you, Sunday deliveries have always been possible but, I gather, at a greatly expanded cost. So what's new about the partnership announced on Monday?

THOMPSON

10:08:30
The e-retail space is extremely competitive. And you can find a lot of different ways to compete. You can compete on product. You can find the best product to sell people. You can compete on service, on the interface, on the website. But the interesting way that Amazon has decided to compete here is it's competing on time. It's competing on day. It's saying, no one else is delivering on Sundays. We will.

THOMPSON

10:08:57
So if you're the kind of person that wants something same-day delivery on a Sunday morning or a Saturday night, there's only one option for you, and that option is Amazon. Amazon isn't just trying to compete for market share. It's also trying to compete for mind share because there are lots of places you can buy toiletries and DVDs and all sorts of things that you would want delivered to you.

THOMPSON

10:09:19
This is a way for Amazon to say, if you want something at this particular time of the week, there is one place for you to go, and that's amazon.com, and hope that you can suck people in for the rest of the week because you've decided to make them your one-stop shop for at least that one day.

REHM

10:09:36
Derek Thompson of The Atlantic. Turning to you, Brian Fung, you say that usually government hires private contractors. This seems to be the other way around.

FUNG

10:09:53
That's right. I think, you know, when you look at the history of the last 10 years of Washington, you know, Washington really grew big on federal contracting and on federal dollars. What we're seeing now is Amazon paying what's essentially a government-owned service to perform a function that a private company would ordinarily undertake with another enterprise.

REHM

10:10:19
What is this likely to mean for the U.S. Postal Service?

FUNG

10:10:26
What we're looking at with the Postal Service is, you know, it's a service that's fundamentally -- I wouldn't say broken, but it's in trouble. You know, it's already on track this year to lose $3.9 billion. Some estimates say that it could be as high as 6 billion by the end of the year. So clearly the Post Office is in need of a cash infusion. Amazon is in a good position to help out with that problem, but more importantly, I think, it's also worth mentioning that, you know, by shifting to Sunday service, the USPS is, in effect, moving to a place in the market where no one else is, as you've sort of indicated before.

REHM

10:11:11
Now, tell me about other retailers. I mean, there's Amazon getting its foot in the door first and fast. Will other retailers follow?

FUNG

10:11:25
I think that's definitely a possibility. This sets a kind of precedent that could potentially shake up the shipping industry, you know, if...

REHM

10:11:33
FedEx and UPS.

FUNG

10:11:34
...FedEx and UPS follow suit, then we may see them begin to get into the Sunday delivery business as well.

REHM

10:11:41
And to you, Vicki Cantrell, what's this going to mean for retailers generally? Are they going to have to become part of the Sunday service?

CANTRELL

10:11:55
I don't think they have to become part of the Sunday service, but retailers are very flexible, resilient. Amazon is a retailer, and what they do is always figure out exactly how they can be -- what's the next thing that they can offer? That's how they came up with Sunday. Retailers are doing this all of the time.

CANTRELL

10:12:20
They are making new arrangements in their store, pick-up in store. They're partnering with FedEx. Walmart says pick up your goods at the FedEx location. So all of the retailers are in fact reacting, as they always do, to come up with innovative ways to make the customer experience great and capitalize on their network and their stores.

REHM

10:12:43
Derek, when you see this kind of change in service coming, what is it going to mean for the Post Office? What's it going to mean for the likes of Amazon, perhaps the other senders? What's it going to mean for retailers?

THOMPSON

10:13:09
It's going to mean the same competition that we've seen in the last 100 years in retail. It's just going to continue. And so I think the historical context here is extremely important. I wrote a column for The Atlantic that sort of tried to place Amazon in the flux of national retail innovation. And what's so fascinating is that, you know, you go back to the late 19th century with Sears and Montgomery Ward, and, you know, these innovations seem incredibly old-fashioned at this point in having a catalog -- you're shopping from your couch.

THOMPSON

10:13:38
And people moved beyond that in the middle of the 20th century. They left their homes. They drove to brick-and-mortar stores. And so you had the birth of brick-and-mortar retail. And now what we're seeing, I think, in a funny way is that Amazon isn't so much bringing retail into the future by having us shop on our browsers on our couches.

THOMPSON

10:13:56
It's actually bringing retail back into the past because that's what people were doing in the late 19th century. They were shopping with a Sears catalog on their couches. And they were placing orders, and those orders were being fulfilled by telegraph and train. And now those orders are being fulfilled not by telegraph and train...

REHM

10:14:11
Hmm.

THOMPSON

10:14:11
...but sometimes by server, if you're looking at Amazon's video service, and sometimes by plane and by, you know, faster cars and by other innovations with infrastructure. Amazon in many ways has evolved, and is evolving, into an infrastructure company because the way to differentiate itself from other retailers isn't so much to offer a wider fleet of products, even though it does, but to differentiate itself based on how many fulfillment centers it has, how close those fulfillment centers are to major cities.

THOMPSON

10:14:41
Amazon is moving into cities and spending so much on all of this infrastructure, all of these houses, these deals with companies like UPS that they're trying to find ways to get products to people as fast as possible. And, so like I said at the beginning, the major differentiator here isn't necessarily so much the product, but the time.

REHM

10:15:00
Hmm.

THOMPSON

10:15:00
People are living in an on-demand world. They expect that, when they click on something, they can get it as fast as possible. And Amazon is saying, if you want it as fast as possible, particularly around Sunday, we are the only option for you. We are the only place to go for shopping.

REHM

10:15:15
So, on the other hand, Vicki, if I really want something immediately, I go to the store because the stores are now open seven days a week. Is there a breakdown that you can give us between online sales and in-store sales today?

CANTRELL

10:15:41
Yes. The online sales have been increasing much faster than the brick-and-mortar sales. Over the last few years, it's in double digits. It's anywhere between 10 and 20 percent, depending upon the timeframe you're talking about, as an increase year on year for online sales. Obviously, same-store sales for brick-and-mortar is much lower and anywhere between one and 5 percent, depending upon the chain. So we're seeing such an incredible increase in, in fact, online sales. But what's more important is -- and he said it -- the consumer is leading everything that everyone does...

REHM

10:16:21
Hmm.

CANTRELL

10:16:22
...including Amazon. Everyone is reacting to the consumer, and the consumer -- it's tough for retailers because they want the experience that is just like the best experience they ever had. So as soon as they experience Sunday delivery, if that's important to them, then they would hope that everyone has that. So retailers are always in a kind of a struggle.

CANTRELL

10:16:43
What I think is important here is that it is consumer-led. The tradeoff here about where they get their merchandise is retailers' capability of blending the channels, making a great experience. But more importantly, is the consumer willing to pay for that? What they're willing to pay for right now, absolutely, isn't as much same-day delivery. What they are most concentrating on right now is free shipping. Eighty-five percent of consumers say free shipping is what they expect. That's a big deal. OK?

REHM

10:17:21
And what's going to happen when Sunday delivery comes along, Brian?

CANTRELL

10:17:27
Right, at a cost.

FUNG

10:17:28
Well, I think, you know, Amazon's strategy here is to get people to sign on for Amazon Prime as quickly as possible. You know, by adding service after service after service to Prime -- I mean, Prime is really Amazon's big money maker. And a lot of what Amazon does often happens at a loss.

FUNG

10:17:47
For example, it sells -- often it sells its Kindle devices at below cost as a way to get people to buy more e-books. And I think, you know, what we're seeing here with Amazon Prime is much the same thing. You know, Sunday delivery is very, very costly. But, you know, when you look at the big picture, Amazon stands to gain a lot of revenue from getting more people to sign up for Prime.

REHM

10:18:11
How much does Prime add to the cost?

FUNG

10:18:16
Well, I think, you know, looking at how much money Amazon, you know, funnels into fulfillment costs, you know, I think it came to something like 5 percent of its total revenues, you know, a few years back in 2011. You know, the potential for Prime to restore some of those costs is pretty large.

REHM

10:18:38
Brian Fung, a reporter for The Washington Post. When we come back, we'll talk further, take your calls. Stay with us.

REHM

10:20:01
And welcome back. We're talking about the announcement this week that Amazon will join forces with the U.S. Postal Service to create Sunday delivery and, in some cases, ship same-day -- deliver same day. And that's what, increasingly, people are saying they want. On the line with us is Derek Thompson of The Atlantic.

REHM

10:20:36
Here in the studio, Vicki Cantrell of the National Retail Federation and Brian Fung, a reporter for The Washington Post. Joining us now is an independent reporter, Mac McClelland. She spent a short time working in an online shipping warehouse. Hi there, Mac. Thanks for joining us.

MS. MAC MCCLELLAND

10:21:05
Thanks for having me.

REHM

10:21:06
Tell me what you did. Describe, if you would, your day-to-day activities.

MCCLELLAND

10:21:12
Well, I was a picker, and those are the people who have to go around and actually find in these massive warehouses the items that you order on the Internet.

REHM

10:21:22
Right.

MCCLELLAND

10:21:22
So one of your guests was saying earlier, you know, these items arrive by trains and planes. But, before that happens, they are handled by humans, by and large, and it might be done by robots entirely at some point in the future. But now it's done by many, many thousands of low-paid workers. So if you order a Barbie on the Internet, when you click -- you know, put that in your basket, there's a person who has a little computer that they carry around all day.

MCCLELLAND

10:21:54
And they have to run to wherever in the warehouse -- and these are vast -- I mean, you know, up to a million square feet, these warehouses, just huge structures. And there are thousands of people either making minimum wage or, in some cases, something like $11 or $12 an hour running around and getting your Barbie and putting it in a tote and sending it away on a conveyor belt before it can be actually packed and sent to your house.

REHM

10:22:23
Tell me what made you think of that working in an online shipping warehouse was going to be any different or any more difficult than warehouse work in any industry?

MCCLELLAND

10:22:40
Well, I had already had a glimpse of it when I was working on an unrelated story. I stopped in a fulfillment center that one of my old friends was managing, and so I had a glimpse of -- and I used to work in warehouses through high school and through college, so I actually have a lot of experience working in warehouses. When I walked into this particular warehouse where they were fulfilling online orders, I couldn't believe how tight the restrictions on them were.

REHM

10:23:11
Like what?

MCCLELLAND

10:23:11
Like, nobody was allowed to talk. There was no talking on the floor. And I was only there for 45 minutes or something, and, in that time, I saw someone get fired for speaking to another person. And I saw another person get fired for going to the bathroom too often. And they all had their cell phones confiscated and kept on the desk of the manager like they were high school students or something. These were grown adults, of course.

MCCLELLAND

10:23:40
And the manager was telling me, you know, I could fire every single person in here right now because I have a stack of applications. I could have them replaced within hours, and so they can't complain about the conditions. The economy's bad enough that we can basically restrict them to whatever rules we feel like. So there's a special kind of dehumanizing aspect to these warehouses that was new to me, and I'm not new to warehouses.

REHM

10:24:10
So, from your perspective, you're giving us the shot from inside that warehouse while we're sitting at home comfortably at our computers. And what that does is to set you all in motion really, really fast.

MCCLELLAND

10:24:33
Yeah, and you just never think about it. I mean, I never thought about it. I buy stuff on the Internet like everyone else, and you just don't -- it doesn't occur to you that, if you're buying products at rock-bottom prices and free shipping that, you know, where does the squeeze come from? And it has to come in from the people on the ground who are working to fulfill these razor thin profit margins, right. So they have to work as fast as possible to get as much product out the door as they possibly can.

MCCLELLAND

10:25:04
And that comes at a great physical cost, not just that it's emotionally or sort of spiritually very sad and damaging. But the physical cost is very high when you are moving super-fast and doing very repetitive actions. And you have to kneel down on the floor and jump up to get these shelves. A lot of people come away with permanent physical injuries.

MCCLELLAND

10:25:29
And the people that I was working with, many of them -- I was 31 or something when I was working there, and it was killing me. And I considered myself to be in excellent shape. Many of the people who were working there were much older than me in their 50s, in their 60s, in their early 70s in some cases.

MCCLELLAND

10:25:47
And they were just telling me, you know, when you wake up every morning, you have to take a handful of Advil and sort of keep that up throughout the day. And if you do that, you can ignore the pain that your body is in and sort of keep through it. And, as I said, I've worked manual labor before, so it's not your normal kind of hurt. It's the kind that doesn't necessarily go away even after you quit your job.

REHM

10:26:11
Well, tell me how long you lasted in that job.

MCCLELLAND

10:26:17
I only worked there for four days not because I, you know, was going to die if I didn't quit, but I just had another assignment that I had to go to. But I was working 10-hour shifts. And every day, you know, leaving, I would leave, and it was dark outside. And I would come back in the morning, and it was dark outside.

MCCLELLAND

10:26:35
And it was almost Thanksgiving. And so everyone was about to start working 11- or 12-hour shifts instead. And they don't tell you until the end of the day, so, you know, towards the end of your shift, you've worked nine hours maybe of your 10. And then they say, guess what, you have two more hours that you have to work.

MCCLELLAND

10:26:56
If you have childcare, you know, you need to be taking care of, you can't have your cell phones with you in the warehouse. So I guess people in your family just have to know that you may or may not be arriving home at some point. There was another person who worked in a warehouse once, too, had a blog about it. And he was saying that they just started going out and buying new packs of socks and underwear because they had no time in between their shifts to do their laundry. And this lasts -- that kind of accelerated schedule lasts all the way through the Christmas season.

REHM

10:27:32
Mac, I know that you wrote up your experience for Mother Jones magazine. And I wondered what your overall takeaway is. Are you trying to help people to understand how their need for quick consumption is affecting the human beings who are working behind the scenes? Are you trying to tear down that kind of online industry because it's happening all over the world? What is or what was your intention as you wrote this?

MCCLELLAND

10:28:20
Just to let shoppers know -- well, first of all, to find out for myself what it was like and to let other people know -- I don't have any illusions that the Internet is going to stop being a major marketplace. I think, you know, that will keep growing, the sector. It always has, and I think that it always will. But if people are aware of what the conditions are like in these warehouses, it positions them to make possibly different choices or even to make demands on the people that they're buying from, on the companies that they're buying from.

MCCLELLAND

10:28:54
I mean, you know, these companies are getting away with these very dicey labor practices mostly because people just aren't aware that they're happening. And if more people were aware and more people were worried about it or upset about it, they could demand better service. And also they could understand that they might have to pay for shipping. You know, in a way the -- I talked to one industry consultant who was saying, I personally have hired people to do fulfillment before.

MCCLELLAND

10:29:26
I didn't know that the conditions were so bad, but there's no alternative right now. And if there was a company that started guaranteeing, you know, no human exploitation, we'd treat our workers decently if you just pay a little bit of a premium on shipping, there is a population that would pay more for that. I would pay more for that in the way that people pay more for organic food.

MCCLELLAND

10:29:49
And so I think that if people become aware of the conditions, then there -- it might open up a place in the marketplace for alternative sets of conditions because this is the way that it's all done right now. And, as you mentioned, speed is only getting faster, and I've heard from other warehouse workers since I stopped working there that they've upped the goals beyond what I was already picking, which was 1,700 items in a day. And so the speed is just getting even faster for the people working there.

REHM

10:30:21
Mac McClelland, she's an independent reporter. The article titled "I Was a Warehouse Wage Slave" appeared in the February 2012 issue of Mother Jones magazine. Thanks for joining us, Mac.

MCCLELLAND

10:30:44
My pleasure.

REHM

10:30:45
And turning to you, Brian Fung, does all this sound familiar?

FUNG

10:30:51
One thing I think Mac's story really sort of sets up is a question about what's going to happen to a lot of the postal workers who are then going to be servicing Amazon. Now, it's obviously -- you know, what postal workers are doing isn't, you know, working on the floor of an Amazon fulfillment center. But, you know, as one of my colleagues yesterday Lydia DePillis wrote in the column, you know, this sets up a situation where, well, why doesn't Amazon simply buy out the Post Office in its entirety?

REHM

10:31:22
But, on the other hand, Derek Thompson, the U.S. Postal Service does most of its in-house stuff by computer, does it not? And so you wouldn't assume that you're going to see postal workers having to move around picking in the same way Mac McClelland describes.

THOMPSON

10:31:50
I'm actually not that familiar with the working conditions of the Postal Service, to be honest. I do think though it's interesting what Mac was saying.

THOMPSON

10:31:57
You know, two of the most respected technology companies in the country, Apple and Amazon, both led by fearless and widely respected leaders, both incredibly popular among the most admired companies in the U.S. going back the last five, 10 years according to surveys, both very dependent on working conditions, whether you're looking at Foxconn in China or these warehouses in the U.S., that when Americans are brought face to face with sort of the fruits of the productivity that they've come to rely on, are often embarrassed by what it takes to bring us the technology that we love.

THOMPSON

10:32:35
And I think that that's sort of an interesting thing that, you know, not only are these companies, you know, beloved from a consumer standpoint. They're also very much admired for what they do as a business. But it is amazing to see the labor conditions. The other half of it that, I think, is worth just spending two seconds on is that in the future, you know, one of the real tragedies for, you know, low-income workers is that there might not be warehouse jobs for them if the robot technology that Amazon is experimenting on...

REHM

10:33:05
Yeah, I wonder.

THOMPSON

10:33:07
...continues to develop a pace. Because these sort of jobs, the ability to find a parcel and put it on a conveyer belt, that's a routine-based job. And you look back over the last 120 years of automation technology, it is precisely these kind of routine-based jobs that are on the frontline of automation and robot fulfillment.

REHM

10:33:33
Derek Thompson of The Atlantic magazine. You're listening to "The Diane Rehm Show." One point that Mac made -- and I'd be interested in anyone's reaction -- she said that the free delivery is part of what keeps the employees of these companies' wages low and pushes them to work harder and harder. Is that true, Brian?

FUNG

10:34:11
I'm not sure that -- I'm not confident of weighing in on, you know, Amazon's business approach to its workplace conditions.

REHM

10:34:23
Yeah, go ahead.

FUNG

10:34:25
But one thing I would say is that, you know, Amazon does operate on razor-thin margins and, in fact, you know...

REHM

10:34:32
It's quantity.

FUNG

10:34:34
That's right. And, you know, Amazon also doesn't make a whole lot of money in profit, and that's partly intentional. Jeff Bezos has sort of been very clear about his willingness to hold on to investments and spend money in a way that doesn't necessarily produce profits. And he's OK with that. That's one of the things that I think makes him, you know, a great investor and a great entrepreneur, but it's also, you know, slightly -- it produces some negative consequences.

REHM

10:35:08
Vicki.

CANTRELL

10:35:10
I think what's really important to keep in mind here is it's not just -- there are many factors here. It's not just the workers and the free delivery, OK. That's -- there's are many, many factors. The financial model inside of a retailer is extremely complex. There's product. There's manufacturing. There's innovation. There's supporting the corporate workers...

REHM

10:35:30
And there's the consumer.

CANTRELL

10:35:32
There's the consumer. There's the marketing. There's the -- so it -- I think it's irresponsible to say that those two things are the only two direct corollaries when the financial model to run a retail business, online, pure play, multichannel, whatever it is, is incredibly complex with many levers at once.

CANTRELL

10:35:53
So it's a full-blown model when you're talking about your profit and where you spend your money and how you innovate and what you have to spend on that. So I agree that we need to be looking at all factors, but it is irresponsible to think it's just a direct correlation between the workers and the profit.

REHM

10:36:09
How quickly do you see companies like Amazon moving toward a robotic industry?

CANTRELL

10:36:19
It's really interesting. It is very dependent upon the type, the area and the product. Some products are not conducive to that. And think about why Amazon is being successful right here. Because they're talking about food and adding, oh, and, by the way, I think I'll get this Barbie for my child on top of food, OK. So the combination of products also lends itself to you can't go 100 percent automation.

CANTRELL

10:36:51
Now, in the future they might build certain distribution centers that only deal in a particular product. The robotics, you know, could run the entire place. But until they understand -- remember that what they're doing is putting distribution facilities close by, OK. So depending upon what product they want to deliver close by will be whether it can be completely robotic or not.

REHM

10:37:16
Vicki Cantrell, she's senior vice president of communities and executive director of Shop.org in the National Retail Federation. Short break here. When we come back, we'll open the phones, hear what our consumers have to say. I look forward to speaking with you.

REHM

10:40:00
And joining us now is Oren Teicher. He is CEO of the American Booksellers Association. Hello, Oren. It's good to have you with us. Tell us about your reaction to the USPS deal with Amazon.

MR. OREN TEICHER

10:40:19
Well, thank you, Diane. You know, we found out about this yesterday. And because it was Veterans Day, we tried desperately to reach somebody at the Postal Service to get an answer and to learn more about what the program entailed. Unfortunately, they were closed. We've reached out to them this morning and are trying to understand more about what it is.

MR. OREN TEICHER

10:40:41
And, obviously, our concern is that we think that if the U.S. Postal Service is making an arrangement with one company, with Amazon, they ought to be making it with everybody and that, you know, it's not the role of the U.S. Postal Service to pick favorites between competing retailers and a very, very competitive e-commerce market. And we hope that other companies and entities will have an opportunity also to be able to participate in meeting what their customers are asking us to be able to do.

REHM

10:41:16
I wonder, Oren, is Amazon, by virtue of stating this deal with the USPS, simply going to go around the booksellers, supplying the books from their own warehouses, rather than including the booksellers in their market?

TEICHER

10:41:40
Well, you know, consumers will choose where it is they want to buy books. And we're perfectly comfortable to compete in the market and to be able to allow consumers to choose where they can get the best service, where they can have the best shopping experiences.

REHM

10:41:58
Right.

TEICHER

10:41:58
Our concern simply is that we don't think that a quasi-government agency ought to be picking favorites between one vendor over another. It may very well be a wonderful idea to help support the U.S. Postal Service, to keep them in business by having private companies subsidize what they do, but to allow only one company to do that, which is what it appears to be -- the announcement yesterday strikes us as being uneven and unfair.

REHM

10:42:31
Derek Thompson, do you want to respond to Oren Teicher's comments?

THOMPSON

10:42:39
You know, Brian has actually written quite well about this idea of adverse contracting. And it's not entirely clear to me that it's illegal or irresponsible for USPS to essentially contract with only one company. Essentially you have a deal between a private company and a quasi, you know, public company or a publicly-run institution like the USPS. Amazon was simply willing to make this deal. And if Walmart or Target or eBay want to reach similar deals with the USPS, I'm aware of no law or regulation that says that they can't. Amazon was simply ahead of this.

THOMPSON

10:43:14
And, as critical as I've been of certain Amazon practices, I'm not critical of their gumption here to essentially say, look, we're in a very competitive race with other retailers. We're going to try to find a way to differentiate based on day. And we're going to come up with this innovative way to do it. And they've done it. I think it's exciting, and consumers want it.

REHM

10:43:33
Brian, do you want to comment?

FUNG

10:43:35
I think it's important to point out that we don't actually know very much about the terms of the deal. We don't know, for example, who approached whom. We don't know whether or not this was Amazon's idea or the Postal Service's idea. So I think, you know, we risk jumping to conclusions a little bit when we say that the Postal Service is out to pick winners and losers. The other thing I would say is that the USPS is already being relied upon by services such as UPS to complete the last miles worth of shipping.

REHM

10:44:09
Yes.

FUNG

10:44:10
And so that's simply because it's a lot cheaper to use USPS than it is to use UPS or FedEx to complete that last mile. So just in terms of economics, it makes a lot of sense why Amazon would want to choose the Postal Service as its provider.

REHM

10:44:29
Oren Teicher, any last comments?

TEICHER

10:44:31
Well, you know, it's absolutely fair that we don't know very much about it. It was a little peculiar that the announcement happened on a day in which the USPS was closed, so we couldn't get answers to some of these questions. Hopefully, those answers will come today. I just think that it's clear that, as a quasi-government agency, its role is to provide a neutral playing field in allowing all retailers to be able to take advantage of what may exist and that we as taxpayers obviously subsidize -- and have subsidized for a long time -- the Postal Service.

TEICHER

10:45:06
And I think in an open competitive environment, all businesses ought to have access to ways in which they can serve the consumers and that nobody ought to be giving favoritism to one business over another.

REHM

10:45:19
Oren Teicher, he's CEO of the American Booksellers Association. Thanks for calling.

TEICHER

10:45:28
Nice to talk to you, Diane.

REHM

10:45:30
All right. And now, let's go to Ben, in Dover, Mass. You're on the air.

BEN

10:45:40
Yes. Hi, Diane. Thanks for taking my call.

REHM

10:45:42
Certainly.

BEN

10:45:43
Yeah, I'm wondering, the role of culture in all of this, I think as a society we need to have a break. I thought Sunday was a day that society's supposed to take a break, but this is a situation (unintelligible) a way to Amazon and the USPS for working on Sundays. They're ruining the employee's quality of life. Where is the role of all that in all of this conversation? Thank you. I'll take my answer…

REHM

10:46:05
All right. Thanks for calling. Brian Fung?

FUNG

10:46:08
I think with what Amazon is doing, you know, the USPS has said that it won't need to hire additional workers to fulfill Amazon's contract. And what we're talking about I don't think is USPS workers shifting to a seven-day workweek. You know, I think there are existing workers in USPS's workforce who already work on Sundays, and those workers will simply be shifted over to perform that task.

REHM

10:46:38
All right. To Julia, in Baltimore, Md. Hi, you're on the air.

JULIA

10:46:45
Oh, thank you. I had one dealing with Amazon, and it will be the last. I ordered a product from Amazon and paid shipping costs, all that stuff, and the product came from within two miles of my residence. That was the return address on the package. And, to me, it spells rip-off real quick. I would have spent less on gas money to go to that store than what I did on the shipping cost to have Amazon supposedly send it to me.

REHM

10:47:26
And why didn't you go to the store as opposed to buying it online?

JULIA

10:47:35
Because I didn't know the store existed. At the time, it was in a shopping center that I normally don't go in.

REHM

10:47:40
I see. I see.

JULIA

10:47:42
And it was a little specialty store in that shopping center.

REHM

10:47:48
Yeah, well, it's a good lesson, Julia. We all have choices and…

JULIA

10:47:53
And it sounds to me like Amazon and Walmart are buddy, buddy, buddies.

REHM

10:48:02
I don't know about that. Do you know anything about that, Derek Thompson?

THOMPSON

10:48:11
Well, they're buddy-buddies in terms of the industry that they're in, but they're actually competitors…

REHM

10:48:14
Yeah.

THOMPSON

10:48:14
…because -- Amazon and Walmart, I can't imagine they're terribly fond of each other.

REHM

10:48:18
Yeah, exactly.

THOMPSON

10:48:19
In fact, you know, Walmart has been forced to spend billions of dollars to catch up in the fulfillment center race because they're trying to have the same sort of same-day shipping that Amazon has premiered.

REHM

10:48:27
All right. To Oscar in Durham, N.C. Hi, you're on the air.

OSCAR

10:48:34
Hello, Diane. Thank you for taking my call.

REHM

10:48:35
Sure.

OSCAR

10:48:36
Listen, I consider myself a very savvy shopper, especially online. And we almost buy everything Amazon, but what you'll find is that, other than the books -- you get good prices on the books. But every other product you're essentially paying the same price as you would be paying on other retailers' sites because what you'll see is that Amazon -- because we're members of Amazon Prime and you don't pay shipping, you get it in two days.

OSCAR

10:49:05
But if you go to another site, you'll find the product for cheaper, but you have to pay shipping costs. And that shipping cost usually adds up to the Amazon Prime price. And it's either exactly the same or a little bit more, but we keep coming back to Amazon because we get it in two days. So…

REHM

10:49:21
Interesting.

OSCAR

10:49:23
…this added delivery for Sunday, that's great, I think. But I don't think you're necessarily getting free shipping. The price is included in there. It's just that, since you're there, it's more convenient, you get it in two days, and it comes from Amazon.com, which we pretty much trust. I mean, they do make mess-ups, like the lady previously…

REHM

10:49:43
Yeah, right.

OSCAR

10:49:44
But they do make mess-ups, but, overall, we're pretty satisfied.

REHM

10:49:48
OK. Oscar, thanks for calling. Vicki?

CANTRELL

10:49:50
I think the important message here is that our number one commodity as consumers these days is time. And if you think of that at the core of everything, then you realize that convenience is king. So across the board, Prime represents convenience. And that's what the other retailers are trying to do, is figure out a way to make convenience for shoppers.

CANTRELL

10:50:16
And, again, Sports Chalet decided to do same-day delivery on skis and then decided to come up with a more convenient way for the shopper to return the goods because that's a kind of uncomfortable process. And that's just one of many examples where the retailers are trying to capitalize on that convenience because of time.

REHM

10:50:39
And an awful lot of products are now available not only with free shipping but free returns…

CANTRELL

10:50:49
Terrific.

REHM

10:50:50
…as well, which is certainly an enticement. Here's an email from Jack in Gainesville, Fla., who says, "Low-paid workers will also be used on the USPS side. I work for the Postal Service. I can tell you cost effectiveness is driving wages down in the USPS. Sunday delivery will be given to contractors for the USPS or lower-paid non-unionized employees." Is that something you are worried about, Brian?

FUNG

10:51:36
Absolutely. It's definitely, you know, labor costs are definitely a big part of the USPS's budget woes. And, you know, at the same time, you're also looking at a $5.5 billion charge that's being levied on the USPS simply for funding its healthcare pension fund. And that's not an insignificant cost for the Postal Service.

REHM

10:52:04
Well, of course. And a lot of people believe that were it not for that congressionally mandated fund, that the USPS would not be in the red, so-called.

FUNG

10:52:19
Absolutely. I think that a lot of proposals that the USPS has come up with have worked in spite of that congressional mandate. And it's something that the USPS has proven itself very willing to adapt to.

REHM

10:52:41
OK. Here's a question from Ben. "Is it possible that the advent of the same-day shipping by Amazon is sort of a protection against a future of 3D printers being in most, if not every, home?" Derek Thompson, what do you think about that?

THOMPSON

10:53:08
The possibility of 3D printers in every single home in America is a little sci-fi. However, if it were the case that every single household in America -- you've got 155 million households with 3D printers that could basically make anything from a shoe to a Barbie doll, I mean, that would be disastrous for Walmart and for Amazon.

REHM

10:53:26
And for Amazon.

THOMPSON

10:53:29
Yeah, it would remake the entire retail industry. And so, you know, it would be an absolutely incredible development for individual families. But it's so far out there that it's difficult to say anything definitive about it. In the meantime, Amazon's -- sorry.

REHM

10:53:42
OK. And…

THOMPSON

10:53:45
Amazon's competitor isn't 3D printers. It's Walmart and eBay.

REHM

10:53:48
And you're listening to "The Diane Rehm Show." Brian, you wanted to weigh in on that.

FUNG

10:53:54
Yeah, I think what Derek was just talking about was a really interesting explanation of why the business of e-retail is going in a slightly different direction. There are a lot of challenges to putting 3D printing in your home right now. For one thing, you can only print in mostly one, maybe two materials at a time. And that's because the conditions that are required for 3D printing are unique depending on the material that you're using.

FUNG

10:54:21
So, for example, if you're using steel, you might need a different focus of the laser or a different temperature inside your chamber than if you were printing in aluminum. So what that winds up causing is it often makes a lot more sense for companies like Amazon to think about integrating 3D printing into its own business model as opposed to thinking of it as a competitor.

FUNG

10:54:46
And we're already seeing that in companies like UPS. UPS has kiosks in San Francisco that allow visitors to 3D print remotely any 3D printing file that they happen to bring to the store. And so, you know, you could see a future in which Amazon builds on that model, perhaps putting 3D printers in its distribution centers in various cities around the country and using 3D printing to fill any logistical gaps in its supply chain.

REHM

10:55:18
And one more email from Rich, who says, "One of your guests is incorrect in stating that USPS is subsidized by taxpayer dollars. This is incorrect, a typical misconception. Taxpayers do not subsidize the USPS." How about that, Derek?

THOMPSON

10:55:47
My understanding is certainly different. I don't know if Brian has another take. USPS is funded by the government, and, as a result, it comes out of taxpayers' dollars. That was certainly my impression.

REHM

10:55:59
Well, but it is a semi-private-run corporation so that, certainly by using postage stamps, buying postage stamps, we're subsidizing the use of the Postal Service.

FUNG

10:56:20
That's certainly true, but I would also say that what Derek was saying is, you know, that the Postal Service is owned by the government, even though we as consumers -- you know, I wouldn't say that taxpayers are necessarily subsidizing the Postal Service but that consumers, when they buy postage stamps, are, in some sense, yes, subsidizing the Postal Services operations. At the same time, you know, those revenues account for, you know, a very small and a declining portion of the Postal Service's records.

REHM

10:56:52
Exactly. Brian Fung, he's a reporter for the Washington Post. Vicki Cantrell of the National Retail Federation and Derek Thompson of The Atlantic Magazine, it's going to be fascinating to see this roll out, how it moves and how it affects all us, whether we start buying more or less online. Thanks to all of you for being here. And thanks for listening. I'm Diane Rehm.
Transcripts of WAMU programs are available for personal use. Transcripts are provided "As Is" without warranties of any kind, either express or implied. WAMU does not warrant that the transcript is error-free. For all WAMU programs, the broadcast audio should be considered the authoritative version. Transcripts are owned by WAMU 88.5 FM American University Radio and are protected by laws in both the United States and international law. You may not sell or modify transcripts or reproduce, display, distribute, or otherwise use the transcript, in whole or in part, in any way for any public or commercial purpose without the express written permission of WAMU. All requests for uses beyond personal and noncommercial use should be referred to (202) 885-1200.

Our address has changed!

The Diane Rehm Show is produced by member-supported WAMU 88.5 in Washington DC.