on Nov 13th, 2013 in Delivery & Collection | 6 comments
 

This week the Postal Service announced plans to move into one of the few remaining frontiers of package delivery – Sundays.

Under a new negotiated service agreement approved by the Postal Regulatory Commission, e-tailing giant Amazon.com will use the Postal Service’s Parcel Select service to ship everything from clothing to garden tools on Sundays. The program is running now in the New York and Los Angeles metropolitan areas, with a rollout planned in 2014 in Dallas, Houston, New Orleans, and Phoenix, to name a few.

Sunday delivery isn’t exactly new. The Postal Service delivers 7 days a week using the premium Priority Mail Express product. So, what’s really new is the low cost of the service – making it a solid option for consumers.

Utilizing the Postal Service’s ubiquitous delivery network Amazon.com is able to keep its costs down and, for example, give its Amazon Prime members who get unlimited, free two-day shipping the flexibility to get packages on Sundays.

The Postal Service faces stiff competition as it seeks to grow its package business and take advantage of the explosion in e-commerce. But it has seen significant gains in its parcel sector through innovations such as flat rate Priority Mail packaging.

With this latest move, the Postal Service is looking to strengthen its market position in business-to-consumer shipping and to further distinguish itself from its main competitors – FedEx and UPS.

What do you think of the Amazon.com partnership? Do you foresee operational, staffing or other problems for the Postal Service as it ramps up for Sunday deliveries? Will this be a net financial win for the Postal Service and its customers? 

6 Comments


How can we have an opinion when USPS and Amazon refuse to release how much Amazon is paying for this, if USPS will actually make a profit or if they will AGAIN subsidize another Corporation's profits?

Sure this will be a net financial win for USPS. The PRC approval assures it. Not a big one, but probably incremental and surely profitable. And its probably a bigger PR win and maybe even a morale booster for carriers and other Postal Employees who are desperately looking for innovative initiatives coming from management.

Amazon's competitors, e.g eBay, may feel compelled to offer something similar and cut their own NSAs, thus providing more volume and revenue for USPS. Maybe even UPS and FedEx will expand their own SurePost and SmartPost Parcel Select offerings.

Who, speaking of which, incidentally, are far more like "main customers" of the Postal Service than "main competitors," are they not? Is it not true that most of USPS's parcel growth is in fact coming directly from FedEx SmartPost and UPS SurePost? And is this not a good strategy for the Postal Service to serve ALL the heavy shippers with Parcel Select, while at the same time serving ALL small to occasional shippers with Priority Mail, thus dominating the market it serves better than any other carrier, namely residential delivery, six or even seven days per week?

It would be fascinating to see the actual deal they gave Amazon. I don't see how they can do this without losing money based on the incremental cost versus the incremental revenue. The DDU Drop Ship rate for a parcel is $2.16 for a 2 pound package. It's only $2.44 for a 10 pound package. The only way for this to work is for Amazon to do DDU drop shipment, or you are adding transportation and sorting for parcels from the NDC or plant. You will need clerks to accept and sort the packages. Although, there was mention of Amazon doing some 'routing'. Perhaps they finally figured out to put the carrier-route number on the package to help with the sorting and eliminate scheme requirements.
Let's figure 15 packages an hour. That's $32.40 in revenue. But Amazon probably negotiated a lower rate. The sort and the delivery cost would exceed this. Even with a lower cost part-time, non-career employee. I also would expect the need for a supervisor to open the building. All this also would be at Sunday premium pay.

The bottom line is that I fail to see how this covers the incremental cost. In my opinion, this is another example of decision making without proper analysis to get headlines. I would be happy to do a real analysis of this if the volume and rate data was available.

NO. There will be no profit. It will appear as if there is but those employees who are now working a "seventh" day and being paid double overtime to deliver these parcels will be paid far more than Amazon is charged for postage. The Postal Service has still not addressed staffing for this function. FedEx Smart Post routinely drop ships parcels that exceed Postal Service size limits but this is ignored, another loss of revenue that is not seen on the spreadsheets. This program will be touted as a winner because only hours used will be compared to dollars gained from Amazon, not the actual dollars paid to the employees. It is another example of robbing Peter to pay Paul.

So far my experience with Sunday delivery and increased Amazon carriage by the USPS is negative. On the Sunday delivery the carrier just dumped the package in the public lobby of my building with no attempt made to leave it at my door, knock on my door or otherwise notify me. I only found it the next day when a neighbor told me they'd seen a package for me in the lobby. Carriers don't want to work Sundays and as a result customer service suffers.

Regarding increased package carriage from Amazon by the USPS, I ordered 2 day delivery through Amazon Prime. Today tracking informed me that my package had been delivered to "the pickup area", whatever that is. No attempt was made to deliver the package to me, no knocks on door, no pink slip, nothing. The USPS is evidently trying to prove that 2nd day delivery was accomplished by delivering the package to a holding area, rather than to me, so on paper it will look like they are fulfilling their contract, when in actuality they are not.

Whatever their rates and finances are, the USPS is again proving that they are a lousy carrier as far as I am concerned. Amazon should never have given the USPS a contract, and is going to take a huge PR hit over all the late and lost packages that the USPS generates.

It is clearly safe to say NO INSTITUTION WILL PUT A STOP TO THIS EXTREME ABUSE FROM POSTAL WORKERS/COURIERS!! ! ! ! ! ! SINCE NO ONE WISHES TO PUT A STOP TO THIS MATTER THIS SHALL BE TAKEN TO A HIGHER STANDARD OF PEOPLE THAT WILL END THIS ABUSE. EVERY BLOODY PACKAGE I EXPECT TO HAVE DELIVERED NEVER GETS DELIVERED. 290 SPRINGFIELD AVE NEWARK NJ POST OFFICE IS A DISASTER. HOW MANY FREAKING COMPLAINTS MUST GO IN, I HAVE BEEN EXTREMELY COOPERATIVE WITH ALL THESE EMPLOYEES. IT IS TIME FOR BETTER ACTIONS TO BE TAKEN. ! ! ! ! ! !

EVERY FREAKING EMPLOYEE AT THAT LOCATION. SEVERAL COMPLAINTS HAVE BEEN SUBMITTED AND NO ACTIONS TAKEN. THE CAMEL'S BACK HAS BEEN BROKEN AND NOW TIME FOR ALL CAMELS TO RISE.

SURVEILLANCE SURROUNDS PROPERTY AND CLEARLY SHOWS NO ATTEMPTS BY ANY EMPLOYEE COURIER

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