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Today Amazon (AMZN) announced it has entered into a definitive agreement with the United States Post Office for the purchase of over 1,200 US Post Office locations nationwide. Also included in the agreement is over 8,500 delivery trucks which will be rebranded as Amazon Prime for Local Folks (APRFLS).
In a press conference announcing the deal, Amazon spokespersons stated the former post office locations will serve as a secure bases for drone deployment for last mile shipping where appropriate. Shares of FedEx (FDX) and UPS (UPS) were down in after-hours trading.
Existing storefronts will be converted to click and collect points for Amazon orders and include drive-thruin what it is calling Prime Express PickUp. "For certain items like groceries, consumers would prefer to pick up items rather than have them delivered." Said Redd Thomas, VP of Common Sense and Retail Disruption at Amazon. "Now we can offer items that are refrigerated, frozen, as well as general groceries. We will even have displays with gossip magazines, mints, and chocolate bars so we don't miss out on the impulse purchases."
The announcement puts to rest the speculation that Amazon was going to purchase existing Radio Shack locations instead.
"Quite frankly, we looked at the Radio Shack and former Kmart locations for distribution," said JP Rooster, Omnipotent Vice President of Omnichannel Customer Centricity for Omnicommerce at Amazon. "They simply didn't have the same potential to lose money on shipping costs as the former USPS locations. Now if we can just figure out how to get packaged oatmeal into a box smaller than the average VW we would be golden!"
Amazon is expected to have a secondary debt offering to pay for the purchase. Analysts don't expect the purchase to have a material effect on earnings because it comes with a lifetime supply of Forever stamps. Barring SEC approval, the transaction is expected to close on April Fools Day, 2015.
Have a great one!
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