• 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? 

  • on Sep 16th, 2013 in Delivery & Collection | 7 comments

    As online shopping has become the norm for many Americans, it has brought operational changes to both brick-and-mortar retailers and online retailers. Shipping costs are now a major consideration for companies. Retailers are working to control their shipping costs as their ebusiness grows, with the traditional retailers relying on their extensive network of stores to reduce shipping costs. Instead of shipping goods from centralized warehouses to far-flung customers, major retailers, such as Wal-Mart, Best Buy, and Gap Inc., deliver from stores close to their customers whenever possible.

    Amazon.com is focused on building more local warehouses and is also investing in its own delivery fleet. Other retailers have made merchandise available to eBay to sell in select cities with its same-day delivery service, eBay Now. Shipping merchandise from locations close to where customers reside allows retailers to save on shipping costs, which are set based on the distances shipments travel.

    Customers are expecting ever higher levels of service. Same-day delivery to a growing number of customers helps retailers provide customers something close to the immediate gratification of an in-store purchase. So far, however, this service has been limited to customers in cities where a decentralized network can serve them.

    While lower shipping costs is good for the retailer and its customers, the shipping giants are likely to feel the pinch. One retailer’s reduction in shipping costs is a courier company’s reduction in revenue. Ultimately though, these e-commerce shipping strategies should improve the online shopping experience and accelerate its growth, which will boost the number of packages sent. That’s a boon for all package delivery companies, including the Postal Service.

    With its reliable delivery network that serves every address in the United States, the Postal Service should be well-positioned for this shift toward fast, local delivery of online purchases. However, some challenges in its network processing capabilities and delivery operations could hinder its ability to capture a larger segment of the package delivery market. What ways could the Postal Service capitalize on these trends? What improvements does it need to make to position itself as the leader in shipping services?

  • on Aug 5th, 2013 in Delivery & Collection | 2 comments

    Global e-commerce sales topped $1 trillion for the first time in 2012 and they are expected to grow another 19 percent this year, according to data from research firm eMarketer.com. While North America leads the world in online sales, Asia is expected to take the mantle by the end of this year. China drives Asia’s growth and this year it should surpass Japan as the world’s second largest e-commerce behind the United States and its $385 billion in online sales.

    This global boom in e-commerce has helped to fuel growth in the package delivery market, prompting the shipping giants, including the U.S. Postal Service, to jostle for shares of this market. The global e-commerce surge has also benefited American companies, who are looking to foreign customers to expand sales and revenues. Surprisingly, a number of well-known retailers only began offering international shipping from their websites a few years ago, including Macy’s, Williams Sonoma, J. Crew, and Crate and Barrel. One reason for the late entry is that shipping beyond the United States is not so simple. As a New York Times article noted last year, the problems include customs, addressing, and postal and shipping fees. In some cases, the cost to ship the package could double the total cost of the order.

    Another hurdle is package returns. Even as retailers figure out how best to reach their overseas customers, they are discovering that customers find it difficult to return packages. The Postal Service recognized an opportunity to simplify that process for online retailers and later this month it will begin a market test of a new international e-commerce return service. International Merchandise Return Service will allow foreign consumers to return unwanted products purchased from American retailers’ websites back to the U.S. The service creates return labels with postage payment, allowing the buyer to print off a label and return the item through the post.

    Modeled after its domestic returns service, the Postal Service expects International Merchandise Return Service to simplify international returns for customers and improve their overall experience, which should encourage even more online shopping. The Postal Service will test the service for 2 years on online sales to Canada and Australia, negotiating prices and agreements with American companies that participate.

    What other ways could the Postal Service improve the international shipping experience for retailers and their customers? How else could the Postal Service tap into the global e-commerce market? Do any of its domestic services provide good templates or lend themselves to adoption for the international market?

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