Chains Using USPS Same-Day Service Face Sharp Cutoff

Written by Frank Hayes
November 28th, 2012

The U.S. Postal Service’s same-day delivery trial for retailers is scheduled to begin on December 12 in San Francisco, but the service will launch with major limitations, according to the regulatory filings that allow the USPS to do this at all. The most significant limit: Each retailer will be allowed to send only 200 packages per day.

The mail agency also won’t be allowed to do more than $50 million in business in the trial or expand it without more regulators’ approvals, which rules out a rapid ramp-up to other cities. The last thing same-day needs is a regulatory straitjacket—but that’s exactly what the USPS’ service and the chains that use it will be saddled with.

The USPS won’t say which eight to 10 retailers will be part of the trial, which has been unaccountably dubbed Metro Post. “We will be the service provider—it’ll be up to the retailers to advertise/market the product,” said USPS Spokesperson John Friess.

But according to filings from October and November, the trial—which is initially slated to run through January 2013—will be hobbled by strict limits on the geographic area involved (only a specified area of San Francisco) and regulator-mandated limits on when packages can be picked up from retailers (after 3:00 p.m.) and delivered (between 4:00 and 8:00 p.m.).

The filings also say pricing will be at least $2.70 per package (“greater than six times the basic tariff of $0.45”). But that’s actually in line with prices for same-day delivery competitors such as ebay, Amazon, Walmart and UPS.

What may be most aggravating is that the USPS is barred by law from “creating an unfair or inappropriate competitive advantage” for any retailer using the service. No competitive advantage? That’s the point of same-day delivery, isn’t it?

But in practical terms, it’s the lack of flexibility that will probably cause the most problems for the USPS trial, as well as for the retailers testing it. Those delivery hours, for example: USPS literally can’t do any deliveries before 4:00 p.m. without an additional OK from the Postal Regulatory Commission. If retailers discover there’s a demand for earlier deliveries, they’re out of luck.

The same is true of expansion beyond those specific San Francisco neighborhoods, or beyond 200 packages per day per retailer. If the service turns out to be popular—remember, it’s starting two weeks before Christmas—that limit could be blown out almost immediately. And it’s retailers who will have to explain to customers why their orders were eligible for same-day delivery 15 minutes ago but aren’t now.

And that explanation might have to be made face-to-face.


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