Can The USPS Win At E-commerce?

Dealing with a decline in the mail it has been delivering since the days of America’s Revolutionary War, in 2012 the U.S. Postal Service began aggressively targeting e-commerce and lapsed customers as the way to salvage its slumping business.

“Really it started almost at the level of cold-calling, talking to people who really hadn’t spoken to us in a long time,” said Nagisa Manabe, who joined the USPS in May 2012 as chief marketing and sales officer from Coca-Cola Co after a career in the private sector. “And really trying to persuade them to consider us as a very viable alternative in the shipping market.”

With further drops in its traditional bread-and-butter products ahead, the USPS wants to capitalize on e-commerce, which consulting firm Detroit LLP has predicted should grow 14 percent this holiday season alone. But industry experts question whether the USPS has enough space in its delivery vans and whether its unionized work force can handle a greater proportion of the e-commerce market.

Over the past two years the USPS has rolled out real-time scanning for packages, a vital tool for online retailers and consumers alike to track their packages. It is also upgrading all of its delivery workers’ handheld scanners.

The rise of the Internet has taken a heavy toll on first-class mail, the USPS’s most profitable product. That falling business played a significant role in the USPS’s fiscal 2014 loss of $5.5 billion, its eighth consecutive year in the red.

From 2009 to 2013, the volume of first-class mail deliveries dropped more than 20 percent. In the fiscal year ending Sept. 30, USPS deliveries declined to 155.4 billion pieces from 158.2 billion. First-class deliveries accounted for 2.2 billion pieces of that decline.

But package deliveries rose to more than 4 billion pieces from 3.7 billion, accounting for $1.1 billion of the USPS’s revenue growth of $1.9 billion. In the run-up to Christmas, the USPS has been doing Sunday deliveries for Amazon.com Inc in a number of cities. Manabe adds that the agency will handle the online retailer’s push into same-day and next-day deliveries “in many markets.”

EBay Inc is another major customer and Manabe says “pretty much anyone who’s in the e-commerce space at least does some volume with us.”

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