Already delivering groceries for Amazon in several cities, the U.S. Postal Service want to expand the test to more cities and retailers.
The U.S. Postal Service has asked for permission to expand a test in which it delivers online grocery orders to consumers.
The USPS filed a petition yesterday with the Postal Regulatory Commission asking to expand a 60-day test it launched in early August for up to two years. In the current test, the Postal Service delivers orders for Amazon.com Inc. Groceries are placed in branded totes and delivered between 3 a.m. and 7 a.m., with the totes left in a location designated by the shopper. The test began in San Francisco and has since expanded to at least 15 other cities.
The new test would begin around Oct. 24 and last for two years, the Postal Service said in its filing. It may include other delivery windows, and will provide a way for USPS to test pricing options.
The filing does not say how many retailers are expected to participate, though implies that others besides Amazon might be involved. “The exact revenue and volume is difficult to predict, as the success of this market test depends on the number of participating retailers, the scope of their businesses, and ultimately, the demand for grocery delivery among consumers in the marketplace,” the filing says.
The filing notes that there are a growing number of grocery-delivery services sprouting up around the country, and notes the recent entry of the online car service Uber into the mix. “With its operational reach, the Postal Service has an opportunity to provide retailers a nationwide solution that offers a trained workforce and the trust and reliability of the Postal Service brand. By expanding its carrier services and offering customized delivery, the Postal Service can garner profitable revenue through new revenue streams.”
During the current test, the USPS says, “deliveries have been averaging 1 to 4 items per address with an average of 160 totes per day for the 38 ZIP codes included in the testing. Through this two-year market test, the Postal Service seeks to test and develop a long-term, scalable solution to enable expansion of customized delivery to additional major metropolitan areas across the nation.”
During the initial test, the retailer—Amazon—delivers groceries packed into Amazon-branded totes, including freezer packs for perishable items, to postal stations between 1:30 a.m. and 2:30 a.m. each morning. “The totes are all the same size and color, and have a QR code on the outside. The Postal Service receives a manifest file from the retailer containing the address and QR code number for each tote. This file is used by the Postal Service to dynamically route totes and create a line of travel for each route,” the filing says.
USPS did not disclose in the public portion of the filing its pricing structure, and petitioned the Postal Regulatory Commission to keep part of the document sealed to avoid revealing competitive information. The Postal Service did say it expected the test would generate no more than $10 million in revenue.
The grocery-delivery initiative is one of several examples of the USPS seeking to generate new revenue by offering new services for fulfilling online orders. In another test with Amazon, the USPS is delivering orders on Sundays in 15 cities.
Amazon is No. 1 in the 2014 Internet Retailer Top 500.