• on Mar 31st, 2014 in Delivery & Collection | 5 comments

    That ethereal voice was enough for Ray Kinsella to build a baseball diamond in his cornfield in the movie Field of Dreams. But is this approach a sound business model for same-day delivery providers? It seems to be the model they are following: provide same-day delivery in anticipation that customers will eventually consider it standard practice – and actually want it.

    Study after study shows consumers shop online mainly because of low prices and free delivery. Consumers consistently rank “fast shipping” toward the bottom of their reasons for returning to an e-tailer’s website. And yet e-tailers, brick-and-mortar stores, startups, and even the U.S. Postal Service have embarked on the quest to provide same-day delivery service.

    Amazon, Nordstrom, and Walmart are among retailers offering same-day delivery in select markets for orders placed by a certain time. Startups such as Deliv and Instacart are getting in on the action, providing same-day delivery services for retailers in malls or for grocery stores. And, in an interesting convergence, eBay and Google have partnered with traditional retailers not only to deliver their products within hours of a receiving an order, but also to sell them online through consumer-friendly platforms.

    The Postal Service stepped into this market with a short-lived pilot project in San Francisco and now a refined test in New York City. FedEx and UPS do not appear to be jumping in wholly with a same-day service aimed at the retail e-commerce channel, instead offering individual customers some a la cart same-day options.

    Overall, the prices providers are charging for same-day delivery range from about $6 to $10. This is roughly in line with the value consumers place on these services, according to surveys. The price point is good news for consumers, but raises questions about same-day delivery’s sustainability. According to some analysts, many of the same-day services are money losers. Still, as the late Steve Jobs understood well, consumers’ preferences change as offerings are refined. Demand for same-day delivery could increase in the future, which means those already in the market could have an advantage over late entrants.

    Share your thoughts on same-day delivery service. Is this something you want? Are you willing to pay extra for it? If so, how much and for what types of products? Where is the best opportunity for the Postal Service in this market?  

  • on Dec 30th, 2013 in Delivery & Collection | 19 comments

    The 2013 holiday season turned out to be a particularly eventful one for e-tailers and the shippers that deliver all those packages to your door.

    Factors like fewer than average shopping days between Thanksgiving and Christmas and an increasing comfort level with online buying helped push holiday e-commerce up significantly. In fact, demand exceeded expectations and stressed shippers’ capacity, causing some late deliveries of their goods.  

    Package delivery is clearly a growth industry and the Postal Service expects its piece of that business to rise 6 to 7 percent annually through fiscal year 2017. But is the Postal Service ready for all these packages? Can it meet the growing demand, or is it hampered by a delivery infrastructure that is largely geared toward letters and flats? We recently took a look at the issue and the results were mixed.

    Our audit report, Readiness for Package Growth – Delivery Operations, found the Postal Service has done a good job of managing package growth in terms of mail volume and workhours. But it could make some changes to better handle future increases. For example, to-the-door delivery works well but curbside mailboxes were primarily designed for letters, flats, and small parcels, and they can’t easily accommodate multiple or large packages. We suggested the Postal Service look at modifying cluster boxes to accommodate more packages.

    We also encouraged the Postal Service to explore investing in shelving space on delivery vehicles to accommodate packages and to continue to develop an advanced dynamic routing system. Dynamic routing analyzes individual addresses to tell the carrier how to get to them more quickly. The tool takes into consideration things like traffic congestion and left-hand turns, both of which can eat up time and fuel. These and other steps outlined in the report should help the Postal Service expand services and increase revenue to meet growing customer demand.

    So, what was your experience over the holidays? Were you among the many Americans who bought more gifts online than in previous years? Were your delivery services reliable or did any part of the experience discourage you from future online buying? What changes would you like to see in delivery and returns?

  • 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? 

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