The USPS announced plans to expand its early-morning package delivery service pilot for 2 years in San Francisco. Currently, the USPS delivers Amazon Fresh totes to consumers’ homes during a 3 a.m. to 7 a.m. delivery window. The approved pilot would allow these operations to continue, and open up the pilot to additional retailers and delivery windows.
This service expansion follows an earlier move by the USPS to slash prices on priority mail packages, aimed at competing more efficiently in an ecommerce world. This new service has potential, as last-mile delivery still needs to be solved, and likely provides an inexpensive way for retailers to reach their customers. Retailers would have to drop off their packages at least a half hour before the delivery window begins; for 3 a.m. to 7 a.m. delivery, all packages or totes must be in the USPS’s hands by 2:30 a.m.
The pilot will end in two years, or more quickly if the service is deemed profitable and worthwhile of investment by the USPS. Sunday delivery, a pilot undertaken last holiday season by the USPS, has passed this test, and will be offered to all retailers this holiday season.
Commission greenlights grocery deliveries by struggling Postal Service
he Postal Regulatory Commission on Thursday approved a plan for the U.S. Postal Service to deliver groceries in San Francisco as part of a test project that could one day expand into a nationwide program.
USPS has already tested the grocery-delivery plan in the San Francisco area through a partnership with Amazon.com, averaging 160 deliveries per day in 38 Zip codes, according to the agency.
Under the new two-year trial run, USPS would work with retail partners to deliver groceries to homes between 3 a.m. and 7 a.m. Participating stores would have to drop off their orders at post offices between 1:30 a.m. and 2:30 a.m.
The commission capped annual revenue for the expanded program at $10 million, telling the Postal Service that it would have to request an exemption to exceed that amount.
The Taxpayers Protection Alliance opposed new test project, arguing that it could harm private grocery-delivery services such as Pea Pod, Whole Foods and Safeway. But the commission said in its approval order that “the record contains no indication” that the plan would cause market disruption, based on information available to the panel so far.
Federal code prohibits certain types of USPS programs from creating an “unfair or otherwise inappropriate competitive advantage for the Postal Service … particularly in regard to small business concerns.”
USPS has teamed up with several retailers over the past year in an effort to generate new revenue for the financially struggling agency, which has lost tens of billions of dollars over the past several years.
The agency agreed to a partnership with Amazon in November 2013 that allows the online retailer to ship packages on Sundays at regular rates through the Postal Service, which normally charges an extra fee for such deliveries.
USPS also announced in November that it would partner with Staples to open postal centers at 82 of the office-supply chain’s locations nationwide.