News Analysis: Amazon now a legal Italian postal carrier -- what will change?

Source: Xinhua| 2018-12-01 07:12:14|Editor: Yang Yi
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ROME, Nov. 30 (Xinhua) -- The world's largest Internet retailer this week became an official rival to the Italian Post Office.

The move might seem like an unlikely one for U.S.-based Amazon, which began operations nearly 25 years ago selling books over the then-unfamiliar Internet. The company has since become the world's largest online retailer as measured by revenue, market capitalization as well as number of employees.

Back in August, AGCOM, Italy's main communications sector regulator, fined Amazon 300,000 euros (345,000 U.S. dollars) for providing delivery services for packages without government permission.

That amount is small by Amazon's standards -- the company generated more than 3 billion U.S. dollars in worldwide profits last year. But the ruling set what could have become a worrying precedent for a company continually looking for ways to deliver its products faster and more efficiently.

"After that fine in August, Amazon had to decide whether it wanted to reply entirely on the Italian Post Office and smaller regional services or whether it wanted to change the rules so that it could develop operations in this sector," said Massimo Melica, a partner with the law studio Melica Scandelin & Partners, a firm that specializes in technology and communications law.

Amazon's new status as a legal postal carrier came after a decree from the Italian Ministry of Economic Development.

Melica said in an interview that even though Amazon is likely to start competing on a small level, the company's move would likely stoke concern at the Italian Postal Office.

"Whenever a company with the size and ingenuity of Amazon moves into a new market, its competitors would do well to pay attention," Melica said.

Malica and others noted that even if Amazon competes only with the postal service only in terms of package delivery, the company could also move to compete in other areas, such as money transfers and online payment and banking services -- areas where the company is already operating.

But Pietro Paganini, founder of Competere, a think tank, told Xinhua that the Italian Post Office was probably entrenched enough to withstand competition from Amazon.

"After many year of struggling, the Italian Post Office is now much healthier and efficient," Paganini said. "Last week, it delivered more than 1 million items in a day for the first time ever. It owns its own fleet of airplanes. It services around 13,000 cities, towns, and monopolies. I think Amazon may hurt some of the smaller, regional and local delivery services the Italian Post Office contracts with. But the main company should do fine."

Paganini said he believed competition would force both Amazon and the Italian Post Office to innovate and become better companies.

"At least in terms of delivery services this can be a classic win-win situation," Paganini said, noting that Amazon will continue to rely on the Italian Post Office for the bulk of its delivery needs in Italy.