Emboldened by rapid growth in e-commerce shipping, the cash-strapped U.S.
Postal Service is moving aggressively this
holiday season
to start a premium service for the Internet shopper seeking the instant
gratification of a store purchase: same-day package delivery.
Teaming up with major retailers, the
post office
will begin the expedited service in San Francisco on Dec. 12 at a price
similar to its competitors. If things run smoothly, the program will
quickly expand next year to other big cities such as Boston, Chicago and
New York. It follows similar efforts by eBay, Amazon.com, and most
recently
Wal-Mart Stores Inc., which charges a $10 flat rate for same-day delivery.
The
delivery program, called Metro Post, seeks to build on the post
office's double-digit growth in package volume to help offset steady
declines in first-class and standard mail. Operating as a limited
experiment for the next year, it is projected to generate between $10
million and $50 million in new revenue from deliveries in
San Francisco alone, according to postal regulatory filings, or up to $500 million, if expanded to 10 cities.
The
filings do not reveal the mail agency's anticipated expenses to
implement same-day service, which can only work profitably if retailers
have enough
merchandise
in stores and warehouses to be quickly delivered to nearby residences
in a dense urban area. The projected $500 million in potential revenue,
even if fully realized, would represent just fraction of the record
$15.9 billion annual loss that the
Postal Service reported last week.
But
while startups in the late 1990s such as Kozmo.com notably failed after
promising instant delivery, the Postal Service's vast network serving
every U.S. home could put it in a good position to be viable over the
long term. The retail market has been rapidly shifting to Internet
shopping, especially among younger adults, and more people are moving
from suburb to city, where driving to a store can be less convenient.
Postal
officials, in interviews with The Associated Press, cast the new
offering as "exciting" and potentially "revolutionary." Analysts are apt
to agree at least in part, if kinks can be worked out.
"There is
definitely consumer demand for same-day delivery, at the right price,"
said Matt Nemer, a senior analyst at Wells Fargo Securities in San
Francisco. "The culture in retail traditionally has been to get a
customer into the store, with the immediacy of enjoying a purchase being
the main draw. So same-day delivery could be huge for online retailers.
The question is whether the economics can work."
He and others
said that consumers are a fickle lot when it comes to shipping, seeking
fast delivery, but also sensitive to its pricing. Many will order online
and pick up merchandise at a store if it avoids shipping charges, or
will agree to pay a yearly fee of $79 for a service such as Amazon Prime
to get unlimited, free two-day delivery or even purchase a
higher-priced item if it comes with "free" shipping.
"Customers do
like same-day delivery when it gets very close to a holiday or it
otherwise becomes too late to shop," said Jim Corridore, analyst with
S&P Capital IQ, which tracks the shipping industry. "But while the
Postal Service has the ability to deliver to any address, they are not
always known for their speed. To increase their speed might prove to be a
much more complex offering than they're thinking about."
As the Postal Service launches Metro Post and sets pricing, its target consumer is likely to include busy professionals such as
Victoria Kuohung,
43. A dermatologist and mother of three young children, Kuohung for
years has gone online for virtually all her family's needs, including
facial cleansers, books, clothing, toys, diapers and cookware.
Kuohung
lives in a downtown Boston high-rise apartment with her husband, who
often travels out of town for work. The couple says they would welcome
having more retailers offer same-day delivery as an option. Still, at an
estimated $10 price, Kuohung acknowledges that she would likely opt to
wait an extra day or two for delivery, unless her purchase were a
higher-priced electronics gadget or a special toy or gift for her son's
birthday.
"I prefer not to spend my time driving in a car,
fighting for parking, worrying about the kids, dealing with traffic and
battling crowds for a limited selection in stores," said Kuohung, as her
1-year-old-twins and 4-year-old son squealed in the background. "But
right now Amazon delivers in two days since I'm a member of Prime, so it
would have to be something I can't get at the corner CVS or the grocery
store down the street."
Under the plan, the Postal Service is
working out agreements with at least eight and as many as 10 national
retail chains for same-day delivery. The mail agency says nondisclosure
agreements don't allow it to reveal the companies. But given the
somewhat limited pool of large-scale retailers — they must have a
physical presence in 10 or more big U.S. cities to be a postal partner —
the list is expected to include department stores, sellers of general
merchandise, clothiers, even perhaps a major e-commerce company or two.
Consumers
will have until 2 or 3 p.m. to place an online order with a
participating retailer, clicking the box that says "same-day delivery"
and making the payment. Postal workers then pick up the merchandise from
nearby retail stores or warehouses for delivery to homes between 4 and 8
p.m. that day. In San Francisco, the post office will closely track
work hours and travel, which could quickly add to costs depending on
traffic, total package volume or the proximity of merchandise in a
delivery area.
"We're trying to revolutionize shipping; we're not
simply trying to get a niche market of consumers," said Gary Reblin, the
Postal Service's vice president for domestic products. He believes
people of varying ages and income levels — young adults who don't own
cars, older Americans who are less mobile — will welcome avoiding costly
or time-consuming trips to the store.
By targeting big partners,
Reblin said, the post office eventually hopes to push pricing down by
making same-day delivery a standard option on retail web sites.
The
new same-day offering is part of the post office's blossoming shipping
and packaging business. That sector was one bright spot in the mail
agency's dismal 2012 financial report, which showed a loss of $15.9
billion and forecast more red ink next year
This holiday season, the post office expects a 20 percent jump in its package volume, higher than its shipping rivals.
Events started when last year's october family's daughter tried to
preview to Chisu's new album. According to child's father, searches took
her to the Pirate bay. Next spring the father got a letter from TTVK
demanding 600 euros. TTVK's letter also demanded a nondisclosure. Father
didn't oblige, but instead, wrote a letter back to the attorney. Letter
included photographs of the bought album, and the tickets to the
concert, which her child attended.
Dwarf planet Makemake laid bare
