How E-Commerce is Fueling the Growth of the USPS

At the recent National Postal Forum trade show, I attended Postmaster General Pat Donahoe’s keynote address. As impressed as I was with his presentation, I was particularly happy to hear him articulate the Postal Service’sTM four main strategic initiatives and especially delighted to have one of them be, “to compete and grow the package business.”

On a daily basis, we hear about economic challenges facing companies on a global scale, certainly the challenges currently facing the U.S. Postal Service® have been in the news regularly. However, one of the very positive developments also across the world has been the growth of e-commerce fueled by consumers buying online. As most of you know – and have probably experienced – buying and selling online is everywhere. If you dig deeper into the U.S. Postal Service’s numbers, you can see that parcel shipping is an area of growth for the Post OfficeTM and the spread of Electronic postage technologies such as DYMO Endicia’s is enabling that growth.

If you think about this a bit more, it makes tons of sense. Most e-commerce is driven by consumers and as such shipping is usually to households which the U.S. Postal service delivers to every day. Sellers – aka Shippers – tend to use the Postal Service because it’s valued appropriately for B2C shipments. The U.S. Postal Service’s network is optimized for residential deliveries while the opposite is true for the private carriers since they have to make an extra trip to deliver to a household.

That’s why private carriers have to add a surcharge for residential deliveries and sometimes rural delivery charges on top of that. They even treat shipments to Alaska and Hawaii as international shipments while the Post Office already delivers there six days a week. Those types of deliveries are not what private carriers’ business plans are based on. In many ways, it’s like baggage fees and other extra fees that airlines have been charging, which have also been in the news lately. Airlines are in business to get people from one city to another, not to feed them or ship their cargo. So they are working to pass those fees onto the customer, and more than covering the costs, those fees are becoming profit centers. Baggage charges bring in billions to the airlines just like surcharges for special services bring in billions to the private carriers. Even if you don’t use the USPS® for all of your shipping, knowing about these charges can help you lower your shipping costs by just moving items to be delivered to those types of destinations to postal service shipping.

You can take this a step further and as you grow your business to sell internationally, you will note how competitive the USPS is since they have relationships with all the global posts. We’ve hosted a couple of webinars with USPS global executives to go through that in more detail and I urge you to watch the recording of either of these webinars, Price Changes and Adapting to New Trends for International Shipments or Change at USPS: What it Means for Parcel Shippers.

I strongly encourage you to look at selling internationally if you have not already – it’s a great way to:

  • Grow your business
  • Naturally diversify your sales
  • Help soften the effects of the slow US economy
  • Take advantage of the soft dollar making your products less expensive overseas

You’ll see us talking more about international opportunities over the coming months.

The USPS has been responding to the growth of the parcel shipping segment more and more in the past few years and you can see changes in product offerings, services and service standards. The Flat Rate products are a great example of this. It really plays on the ease of using the Postal Service. You pay one rate and you get your package where it’s going with no weighing and no hidden charges. Since the introduction of that first box, we’ve seen that first Flat Rate box joined by new sizes of boxes and envelopes as well as the introduction this year of the Regional Rate box that is priced to make nearby shipping extremely competitive.

If you haven’t recently shipped a parcel with the USPS, I think you’ll be pleasantly surprised by the level of visibility you have in tracking. Delivery Confirmation now offers multiple scans along the way a level of detail comparable to private carrier tracking. I also suspect that the addition of an Adult Signature Required service is with an eye to expanding the types of goods that can be shipped through the Postal Service although we are still waiting on announcements. It’s a good idea for all shippers to stay up to date on new products and services from the USPS because, I believe that we will be seeing more offerings created with shippers in mind.

All in all that leads you to see why the USPS is investing and growing in those segments and how they have positioned themselves as the leader in the B2C space and growing substantially. You can see why even private carriers use the USPS to deliver to households for some of their offerings.

For more insight, check out our ecommerce tips and trends page.

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