USPS cleared to extend Amazon grocery delivery trial
Postal regulators have given the US Postal Service the green light to expand its grocery delivery trial with Amazon beyond an initial two-month period. The Postal Regulatory Commission said it believed the service run by the Federal agency in San Francisco would be run at similar prices to existing private sector grocery delivery firms, so would not undermine the private market.
But, USPS will have to notify the regulators if it intends to expand the service to other geographic areas, or make the service permanent.
USPS is planning on running the expanded trial for two years, although it could be terminated or turned into a permanent product earlier than that. With regulatory approval for a full market test, the Postal Service will also now be able to collect revenue from the trial.
However, the Commission refused to lift the $10m limit on how much revenue the trial can generate, saying the restriction would not be lifted unless the Postal Service provides more financial data from the test.
The Postal Service had wanted clearance to generate up to $50m revenue a year from the trial, but was unable to predict what kind of volume or revenue will be seen from the trial.
Tests
USPS has been testing out the operational side of early morning grocery deliveries since mid-August for Amazon’s AmazonFresh service, operating in 38 zip code areas within the San Francisco metropolitan area.
Grocery items, including chilled and frozen items, are dropped off at a Postal Service site between 1.30am and 2.30am, for delivery to customer doorsteps between 3am and 7am.
If the new service proves successful, it could expand to other metropolitan areas across America, offering the Postal Service an important new revenue channel, effectively an expanded package business, as it counters the financial impact of falling letter volumes.
Taxpayers’ watchdog The Taxpayers’ Alliance had expressed concerns that the new USPS service would prove a threat to existing private sector businesses providing grocery deliveries.
However, the regulators said there was no indication that the Customized Delivery service would create an unfair advantage for the Postal Service or its client, even against small business concerns.
“The prices offered by grocery delivery service providers operating in San Francisco are comparable to the price range the Postal Service intends to test. Therefore, Customized Delivery is unlikely to provide the Postal Service or the retail partner an unfair or inappropriate advantage,” said the Commission.
