December 29th, 2014

USPS Targets E-Commerce to Salvage Failing Business

Category:E-Commerce | Posted By Mai Erne at 10:00 AM

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Facing a slump in the mail it had delivered since the Revolutionary War, the U.S. began aggressively targeting e-commerce and lapsed customers as the way to salvage its declining 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 products, the USPS wishes to capitalize on e-commerce, which is predicted to grow 14 percent this holiday season alone.

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.”

The USPS’s competitive advantage lies in the fact that it already delivers to every house in America and analysts estimate it can do so for around a quarter of the cost charged by United Parcel Service Inc and FedEx Corp, which are both competitors and customers of the USPS.

“The U.S. Postal Service has the ultimate last-mile delivery network, so it has a real opportunity here,” said Vinnie DeAngelis, vice president of postal relations at Neopost USA, which provides tracking and other software for e-commerce retailers and delivery companies.

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