USPS Metro Post pilot is going in different directions

For the United States Postal Service (USPS), what might not work in one city may not work in another.

Metro Post, an initiative rolled out by the USPS in December 2012 in San Francisco that serves as a package delivery service providing customers with same-day delivery from participating locations within a defined location, will cease operations on March 1, according to a report from the USPS Office of Inspector General. But that does not mean the effort is squashed permanently, as USPS continues to go forward with Metro Post in New York.

When the USPS first heralded Metro Post in an October 2012 filing with the Postal Regulatory Commission, it said it “observes that online e-commerce companies and retailers have realized the power of online shipping platforms, which has created an opportunity for the Postal Service to explore the feasibility of same-day delivery.”

Keen on leveraging growing e-commerce activity, the Metro Post market test kicked off in San Francisco on December 12, 2012, with the objective of it being to test the operational feasibility of same-day package delivery and determine the optimal pricing structure for this type of service.

As previously reported by LM, the San Francisco Metro Post market test had a 200 package daily limit, and the USPS said in the filing that customers can receive same-day delivery in various ways:
-by using a qualifying online e-commerce platform to purchase items online;
-purchase items at retail stores that have partnered with test participants; and
-visit a test participant’s web site to purchase items
In terms of expected revenue, Metro Post was expected bring into the financially-ailing USPS, the filing said it was anticipating between $10-$50 million during the market test period. And the USPS said that Metro Post was likely to contribute to its financial stability by generating more package deliveries that do not currently move within the postal system.

But according to the USPS OIG report, these objectives fell far short of expectations for various reasons. One main reason, cited the report, was that the USPS did not properly implement the pilot, nor did it have sufficient participation from the six selected retailers to achieve the required minimum daily target of 200 packages per delivery day, with only 95 cumulative packages sent by the participating retailers over 5 months. And it added that in San Francisco the implementation was based on “the expectation of agreements with several large retailers,” but only one actually participated and then withdrew, due to other operational priorities.

Due to this situation, the report pointed out that the USPS subsequently went forward with small local retailers and were unable to hit its daily volume goals, ending up earning $760 on a $10,288 investment for a net loss of $9,528. 

A noted parcel expert said that a slow adoption rate might serve as the culprit for the Metro Post pilot ending in San Francisco.

“The market has not yet demanded-nor adopted-same day service,” said Rob Martinez, president & CEO, Shipware Systems Corp, a San Diego-based parcel consultancy. We’ve seen plenty of examples of merchants that provided the service and even promoted it during the holidays (at pricing similar to next day delivery) and received very poor adoption.  It’s the greatest service innovation in parcel that no one is asking for.”

USPS spokesperson Zy Richardson said that the USPS plans to eventually re-initiate the Metro Post pilot in San Francisco, when it can secure participation from large retailers.

As for the New York-based Metro Post pilot, which originally kicked off on December 17, 2012, USPS said last December that it planned to expand it for another year through December 16, 2014, adding that it expects to begin onboarding customers as part of the Metro Post market test in the near future.

Richardson said that the goals for New York reiterate the same goals of the Metro Post service.

“Metro Post is designed to improve the shopping experience for customers in participating e-commerce sites by offering same-day delivery in a metro area,” she said. “Customers can request same-day delivery through Metro Post through their online or in-store purchases at participating e-commerce sites. As online shopping continues to grow, Metro Post will help e-commerce sites leverage rising consumer expectation for convenient delivery options and positions the Postal Service very competitively in the shipping marketplace.”