business news in context, analysis with attitude

by Kevin Coupe

E-commerce pioneer Amazon and the financially embattled US Postal Service (USPS) announced this morning that they will team to deliver packages on Sundays - first in the New York and Los Angeles metropolitan areas, and eventually, as the program rolls out in 2014, throughout much of the United States. The Sunday deliveries will be available at no additional charge to members of the Amazon Prime program, which provides unlimited two-day delivery of packages with the payment of an annual $79 fee.

"If you're an Amazon Prime member, you can order a backpack for your child on Friday and be packing it for them Sunday night," Dave Clark, Amazon's vice president of worldwide operations and customer service, said in a prepared statement. "We're excited that now every day is an Amazon delivery day and we know our Prime members, who voraciously shop on Amazon, will love the additional convenience they will experience as part of this new service."

Amazon consistently has worked to add value to its Prime program, adding benefits such as streaming video without raising the price. It is with good reason - the company has said that it ships more than twice as many items to Prime members in the United States than to those shoppers who opt for free shipping by spending a certain amount.

The USPS, which, as the New York Times reports, lost close to $16 billion last year, has said that while it loses money on first class mail, it makes money on package delivery. And, the USPS tells the Times that it expects "to make more such deals with other merchants, seeking a larger role in the $186 billion e-commerce market."

The Wall Street Journal reports that "a Postal Service spokeswoman said the agency wouldn't need to hire additional workers. She said officials have been working for more than a year on a "flexible" workforce that could be asked to clock in on Sundays. 'We're ready for Sunday in the current markets,' the spokeswoman said. 'If this were to expand, we would look at staffing levels and adjust accordingly'."

At this point, delivery companies such as FedEx and UPS do not make Sunday deliveries, though it certainly seems possible that this new deal will put pressure on them to adjust to a new reality. As noted here on MNB earlier this year, Amazon's move to its own trucks in markets offering Amazon Fresh - currently just Seattle and Los Angeles, but the list is expected to grow to San Francisco and beyond - creates potential problems for parcel carriers that have grown to expect that Amazon will represent a certain percentage of their profitability. The new Amazon-USPS deal could reshape the delivery landscape, especially at a time when Amazon has been positioning itself to provide next day and even same-day delivery to customers who want products ordered online faster.

There's no question that the notion of instant gratification is gaining increased traction. The New York Times has another story this morning on an unrelated issue that, somehow, strikes me as being connected - saying how some children's cable networks such as Nickelodeon and the Disney Channel have decided to start offering programs online before they can be seen on television; the driving idea is that kids are not tethered to traditional notions of networks and scheduling, and that one has to be far more flexible in how one provides products and services. This is not a concept unique to younger generations, since both Netflix and Amazon are moving into original programming that can be watched on people's own timetables, rather than only at arbitrary times assigned by the network.

It seems fair to suggest that Sunday deliveries fall into this same continuum.

One other thing, if I may…

I take absolutely no credit for this announcement, though I think I've been suggesting for years that it makes utter sense for Amazon and USPS to do business, and that, in fact, USPS officials should have gone to Amazon founder/CEO Jeff Bezos's office on bended knee to beg for such an opportunity. Not sure if that's exactly what happened here, but I think it is a good thing for the USPS to be doing this; somehow, if it is going to be vital, it has to reinvent itself by expounding its reach and service rather than by contracting.

I have no idea if anyone at Amazon or USPS is paying attention, but here's the next thing I want to see - Amazon lockers in post offices all over America. Assuming Amazon still is committed to installing lockers that allow people to pick up products rather than having them delivered to their homes or offices, it would make perfect sense to put them in post offices - they are located in virtually every community, they are open seven days a week, and the concept of post office boxes is a business proposition with which postal workers are familiar.

Today's announcement is an Eye-Opener. There are, I suspect, more Eye-Openers to come…
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