USPS early morning grocery service could “hurt private businesses”
The US Postal Service should not be allowed to run early morning grocery delivery services because it would hurt existing private sector providers. That was the view of the US taxpayers’ watchdog the Taxpayers Protection Alliance, as it commented on the Postal Service’s request to expand a two-month test working for AmazonFresh, which began in August.
USPS served notice last month that if wanted to expand the service called Customized Delivery from the initial single metropolitan test area of San Francisco to a number of cities.
The service provides delivery of groceries and other prepackaged goods during a 3am to 7am slot, with the Postal Service intending to expand the test from 24 October. USPS wants to test other delivery windows as well, and potentially have retailers specify a timeframe for delivery.
The Postal Service said in its submission to the Postal Regulatory Commission (PRC) that it believes its nationwide solution would generate profitable new revenue.
It argued that the prices it aims to test will not undermine the private sector in grocery deliveries.
It said: “Grocery delivery services are expanding across the nation, with several different types of companies beginning to offer this service in recent months. The prices offered by competitors for grocery delivery typically fall within the price range that the Postal Service intends to test. Therefore, the prices offered by the Postal Service would not create an inappropriate market disruption.”
But the non-profit, non-partisan Taxpayers Protection Alliance told the regulators it believed the service will undercut the established market.
“This action works to hurt private businesses who cannot afford to bring their price down to a level where they can be competitive. A government agency should
not be working to compete with American businesses,” stated Alliance president David Williams.
The TPA suggested that the grocery delivery service was an attempt to expand the Postal Service reach without looking for “real reform” to solve its problems.
It also suggested that the cash-strapped Postal Service had not shown enough evidence that its grocery service will be profitable.
“There are too many questions that have yet to be answered. The Postal Service is at a very fragile
point economically and any further damage could be catastrophic. The PRC needs to take a very
close look at this test program,” added Williams.
USPS has been running a two-month trial with Amazon’s AmazonFresh business in San Francisco
Anne J Siarnacki, the Public Representative appointed to provide a general public interest view on PRC matters, also raised concerns that the Postal Service has not done enough to show that its Customized Delivery service will not cause market disruption.
She said the Postal Service’s description of the service was too vague and open to change to know whether it would disrupt the existing market.
“The Postal Service failed to assert that the experimental product ‘is not likely to result in unfair or otherwise inappropriate competition’ and provided no explanation on the record from which the Commission can make such a finding,” Siarnacki said.
Although the Public Representative supports the Postal Service’s proposal and said the market test was in the public interest, Siarnacki said USPS should not be allowed to expand the market test beyond a $10m-a-year revenue.
The AmazonFresh trial saw consumers in 38 Zip Code areas in metropolitan San Francisco paying a flat annual fee for unlimited free delivery of AmazonFresh grocery orders of more than $35.
Siarnacki stated her belief that based on the information available it was “unlikely” that the service would cause competitive harm to the marketplace generally. However, there could be harm to small businesses that would require more investigation.
She said the PRC should reassess the Customized Delivery service every time USPS expands its geographic reach or the range of products being delivered.