Servicing the densest areas is a way for Amazon to keep costs low. But, it threatens to bleed out the USPS, which has the legal imperative to serve all US addresses — even the low-margin, low-density rural neighborhoods.
Hottovy of Morningstar estimated that delivering a packages to a rural home over an urban home costs Amazon anywhere from 1.5 to 4 times as much. “Amazon was able to reduce their cost quite a bit by going to the USPS,” he told Business Insider. “In rural markets, it’s exponentially that much more expensive.”
As long as the USPS is around, Amazon won’t deliver to rural areas unless it’s profitable. Hottovy said Amazon won’t likely deliver to rural areas until drone delivery, which may make rural deliveries cheaper, is a reality.