The Postal Service Is Partnering with Amazon to Deliver on Sundays
Everybody wins—except for brick and mortars.
Photo via the USPS
The US Postal Service lost $16 billion in 2012, and has spent much of 2013 trying to get back in the black. Following a failed bid to cut some Saturday service, the USPS has taken a much different tack by adding Sunday deliveries—but only if you order from Amazon.
It's a fairly obvious move for both the USPS and Amazon, who announced the partnership yesterday. For Amazon, it means faster deliveries, which has been one of the firm's biggest focuses in its bid to negate every advantage brick-and-mortar retailers have.
As for the Postal Service, the New York Times notes that first-class mail (letters and bills) service loses money, while parcel service is a net positive. Adding parcel-only service on Sunday—a day on which competitors like UPS and FedEx don't deliver—is expected to be a profitable exercise.
The partnership starts this Sunday in Los Angeles and New York in time for the holiday shopping season, and will expand to "Dallas, New Orleans, Houston and Phoenix, among others," per the Wall Street Journal. The Journal also explains that limited sales volumes might make the venture less of a leap forward than expected.
If shoppers don't buy more goods to take advantage of extra deliveries, spreading what's currently six days' worth of parcel load over seven days isn't an immediate revenue boost. That's a highly simplified scenario, of course, but both USPS and Amazon are definitely hoping that adding more service days will convince even more people to buy more stuff online.
That shouldn't be a problem, as the e-commerce sector continues to grow at a very healthy pace. According to recent numbers from eMarketer, US e-commerce is expected to expand 16.4 percent this year to a total of $262.3 billion in sales, following 16.2 percent growth last year. In Forbes' coverage of the projections, Chuck Jones highlights the fact that Amazon is growing even faster than the industry average. While that's driven by Amazon's selection and prices, it's also due to the company's efforts to get packages from warehouse to door as fast as possible.
For the Postal Service, a limited trial is only the first step. USPS says it is actively looking to expand Sunday deliveries through partnerships with other retailers. It probably won't have trouble finding more packages to deliver: With everyone from eBay and Google to Wal-Mart trying to compete with Amazon's same-day delivery, speed is obviously a huge focus for major e-tailers. While USPS hasn't announced it's ready to tackle same-day services, cutting a day out of shipping times is still a big advantage any way you slice it.
It's not going to solve the Postal Service's woes immediately—which, to be fair, are largely due to unusual pension funding requirements—but it is a good sign that the USPS is working to secure its future sources of revenue. Along with getting more people to buy stamps online and send more packages, partnering with the largest e-tailers around is a smart way to lock down a steady stream of parcels to ship. Of course, if USPS gets more tightly integrated with Amazon, you have to wonder, as Dan Nosowitz did, if Amazon would just buy it outright. On the other hand, if Amazon ends up killing brick-and-mortar stores, the USPS will have a whole lot more packages to ship.