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USPS to trial same-day ecommerce package delivery

Monday, October 15th, 2012

The US Postal Service is planning to try its hand at same-day package delivery within certain metropolitan areas of the United States.

The world’s largest mail delivery service has been seeing good growth in its parcel shipping volumes this year, as letter volumes have continued to decline.

It is now looking to trial a new “Metro Post” service that would allow ecommerce merchants to offer rapid home delivery to customers in certain cities.

A new market test is set to begin on or shortly after 12th November, assuming regulators give the green light, to allow USPS to test the operational feasibility of same-day delivery to multiple locations, and work out a possible pricing structure.

The Postal Service said it is looking to run the service with up to 10 retailers that sell online, but who also have a physical store network. Companies taking part in the trial will have to have at least 10 physical locations across the US, with one or more situated in a trial area.

Testing will involve about 200 packages a day during the trial’s initial period, although the service could be expanded once the early testing is completed.

The trial would see cut-off times set between 2pm and 3pm for items to be delivered same-day, with items expected to be delivered between 4pm and 8pm.

The initial stage of the trial would be completed in January 2013, but the testing of the Metro Post service as a whole will run for one calendar year. It could then become a permanent product if successful.

Filing for approval from regulators, USPS stated: “The Metro Post service offering is designed to improve the shopping and delivery experience for customers, and therefore generate more package deliveries that do not currently move within the postal system.”

USPS said several prominent companies are currently offering some form of same-day delivery, or are actively exploring such a service in the near future. Although it is keeping its pricing confidential, the Postal Service said it will test different price levels, and rates for its trial would be generally similar to those offered by existing same-day providers.

The new Metro Post service would be a competitive parcel service for USPS, which is expecting the trial to generate more than $10m in revenues, although “exact revenue and volume is difficult to predict”.

Same-day delivery

For retailers that have a brick-and-mortar store presence, being able to offer rapid delivery of products to consumers local to their stores is seen as a big way to hit back at dominant Internet-only retailers like Amazon.

However, Amazon and eBay are also trying same-day delivery in select American cities.

Wal-Mart, the largest physical retailer, revealed last week that it has begun testing same-day delivery for a limited range of online purchases in four areas, including Northern Virginia, Philadelphia, Minneapolis and San Francisco. Deliveries can be rapid because items are sourced from local stores, with shipping priced at $10.

UPS has shown its interest in the concept recently by investing in the UK same-day delivery company Shutl, which is currently in the process of launching in the United States to build on the increasing interest being shown in rapid retail home delivery.

London-based Shutl currently offers delivery in under an hour to almost two-thirds of Britain, and has set a record of delivering a product in less than 15 minutes of purchase. It intends to launch in New York, San Francisco, Toronto, Atlanta and other US cities from 2013.

Tom Allason, the Shutl founder and CEO, said at the recent Ecommerce Expo in London that as well as Amazon and eBay, Google was also potentially looking to get into the same-day product delivery space.

“We think this space is going to get really, really important,” he said. “Consumer expectations are moving faster than they ever have before, and they are only moving in one direction.”

Source: Post&Parcel/USPS

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