Business

Inside The Post Office’s Latest Desperate Effort To Compete

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Peter Fricke Contributor

The United States Postal Service plans to expand market tests of a grocery delivery service, but critics say the venture is just a diversion from the agency’s financial and operational woes.

The USPS announced its intention Monday to expand the “Customized Delivery” program, which provides early-morning residential delivery of pre-ordered groceries, to New York City on or shortly after June 29, EcommerceBytes reports. (RELATED: USPS Getting Into the Business of Delivering Groceries)

The deliveries will be made by “city carrier assistants,” non-career employees who receive lower wages than their career-track counterparts, between 3 a.m. and 7 a.m.—but “without disturbing the recipient,” the USPS claims.

Customized Delivery is part of a larger effort by the USPS to find new sources of revenue through expanded service offerings, including same-day delivery. The Postal Regulatory Commission (PRC) approved a two-year market test of the program last October, but capped annual revenues at $10 million until its financial feasibility could be evaluated, according to 21st Century Postal Worker. (RELATED: Struggling US Postal Service to Launch New Apparel Line)

Despite the PRC’s backing, though, opponents of Customized Delivery argue the forthcoming expansion was approved without adequate data from previous test runs, and warn the USPS could end up losing money on the program while undermining private sector competitors.

“This announcement comes on the heels of unanswered questions about previous attempts at grocery delivery service, a quarterly loss of $1.5 billion, and a plan to spend $6 billion on a new fleet of trucks,” David Williams, president of the Taxpayers Protection Alliance, points out in a blog post. “Instead of trying to compete with the private sector to deliver groceries and buy new trucks,” he contends, “the USPS needs to get their fiscal house in order and focus on their core mission: delivering mail.”

TPA filed comments with the PRC last October opposing the nationwide market test because the USPS had failed to demonstrate that initial trials did not cost the agency money, and Williams asserts the same issues “are still pertinent in this round of expansion.”

Moreover, he claims, the Postal Service’s experiences with other expanded service offerings, like same-day delivery and banking, argue against the financial prospects for Customized Delivery.

In January, for instance, the PRC issued a report revealing that a same-day delivery pilot program in San Francisco generated just $760 in revenue while incurring over $10,000 in expenses. Officials blamed the failure on tepid interest by consumers and retail partners, which prevented the USPS from achieving the volume necessary to make the effort profitable. (RELATED: Going Postal: Same-Day Delivery Is Coming To DC (But It Probably Won’t Work Out)

“A basic rule of successful economics is that before expansion, there should be an analysis of current results,” Williams concludes. “Instead of expanding services (and expenses) beyond mail delivery, the USPS needs to institute management reforms to ensure a solid future.”

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