• on Jan 5th, 2015 in OIG | 17 comments

    The year 2014 was certainly historic on the postal and logistics front. Alibaba entered the U.S. market with a bang, setting a record with the largest ever U.S. initial public offering. For the first time ever, non-mail revenues exceeded mail revenues for postal administrations around the world. Shippers braced for the full effect of dimensional weight pricing. And the U.S. Postal Service added its name to the growing list of agencies and companies to suffer a data breach.

    All in all, quite an eventful year. OIG staff sifted through the news and put together a top 10 list of postal stories, in reverse order of impact. Share your thoughts and take our poll to vote for your top story.

    10. Staples Taps Out – Under pressure from labor groups, Staples and the Postal Service ended a pilot program to set up mini-post offices in stores. Instead, the 82 Staples pilot locations transitioned into the Postal Service’s long-established Approved Shipper Program, which offers some postal products alongside those of other carriers.

    9. Open Sesame! – China’s biggest e-commerce company Alibaba set a record for the largest U.S. initial public offering ever, raising $25 billion. Alibaba’s CEO said the company plans “aggressive expansion” in the U.S. With any luck, the Postal Service will figure out how to partner with Alibaba too.

    8. Dim Weighting on Shippers – FedEx and UPS announced plans to price all ground parcels based on how much space they take up during transport, a concept known as dimensional weight, or dim weight, pricing. Analysts predict this change will result in the most dramatic rate-spike for shippers in decades. Meanwhile, the Postal Service bucked the trend and lowered most commercial Priority Mail prices in 2014, a move aimed at gaining commercial customers.

    7. A Capital Idea – For the first time in years, the Postal Service has funds to invest in capital projects. Helped by the exigent price increase in January 2014, the Postal Service ended the fiscal year with $1.4 billion in “controllable” income and said it has about $2 billion for capital investment.  

    6. Postal Banking Gets Fresh Look – A raft of media coverage of an OIG paper on postal financial services energizes a lively public policy debate, including a slew of conferences, and puts the idea of postal banking on the menu of possible reforms.

    5. Invasion of the Last Mile – Last mile delivery has gotten crowded with retail giants, such as Walmart and Nordstrom, trying their hands at same-day delivery and/or experimenting with crowdshipping. And smaller players are providing niche delivery services, such as Peapod for grocery delivery or Deliv that shuttles goods from shopping malls to customers.

    4. Amazon Eyes World Domination – The giant e-commerce provider is moving into all aspects of the supply chain and beyond, opening warehouses and distribution centers, offering same-day delivery, testing drones, using bikes, providing cloud services, and after-sales support services. Amazon is also a valuable partner of the Postal Service, collaborating on Sunday delivery and the new grocery delivery test.

    3. New Champion of the World – Non-mail revenues now exceed mail revenues for postal organizations around the world, according to Accenture’s annual report on high-performing posts. This shift indicates how important parcels and other diversified products - representing 52 percent of posts' total revenues - have become to posts.

    2. Madame Postmaster General – Postal Service Chief Operating Officer Megan Brennan is named to succeed retiring Postmaster General Patrick Donahoe. Brennan will be the first female PMG in the Postal Service’s 240-year history.

    1. Hack Attack – The Postal Service joins the growing list of government agencies and corporations to experience a data breach and the repercussions that come with it, including a congressional hearing, customer and employee concern, and some corporate soul-searching. There were almost 61,000 cyber attacks and security breaches across the entire federal government last year, according to a recent White House report. 

  • on Apr 21st, 2014 in Products & Services | 0 comments

    Social media isn’t just for fun any more. Sure, millions of people are still tweeting, posting, pinning, and sharing things with each other online by the nanosecond. But 70 percent of businesses and organizations worldwide, including the U.S. Postal Service, also have active Twitter, Facebook, LinkedIn, or other social media accounts.

    Why? Because they recognize that social media is an important channel of business communication, particularly in light of research from management consultants McKinsey & Company estimating there is between $900 billion and $1.3 trillion in annual value to the economy that could be unlocked by social media technologies. So how is the Postal Service using social media? Last summer we released a Management Advisory noting that the agency is present on no less than 18 social media sites. And now our new white paper – Like, Share, Tweet: Social Media and the Postal Service  – identifies multiple ways the Postal Service could not only improve its current social media activities, but also expand upon them to develop new products and services, such as:

    • Crowdshipping
    • Identification services
    • Hybrid products bridging physical and digital communications
    • Social e-commerce services

    Social e-commerce services, for example, could facilitate the use of social platforms as storefronts, similar to online shops on Etsy or Amazon. The Postal Service could manage those storefronts’ back-end operations by providing services such as micro-warehousing, fulfillment, and delivery.

    The paper ultimately makes the case that an overall stronger and more robust social media strategy could help the Postal Service remain competitive in the digital age by better responding to changing communication needs, improving the customer experience, creating value through social commerce, and cutting costs.

    Tell us what you think:

    • How could the Postal Service improve its social media activity?
    • How might your view of the Postal Service be affected by better social media activity?
    • Do you prefer businesses that engage customers via social media? 
  • on Mar 31st, 2014 in Delivery & Collection | 6 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?  

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