Could the Postal Service Lose its Niche in Parcel Delivery?

The Postal Service's parcel delivery business have a limited competitive advantage in serving customers that send three types of shipments.

1. Items under 2 or 3 pounds shipped to households.  These customers either ship these items themselves or use a consolidator like FedEx Smart Post.
2. Items shipped  to rural areas and in particular rural households.
3. Infrequent shippers who find retail services offered by the Postal Service more convenient or lower in cost.

The Postal Service serve these markets because they have a competitive advantage due to its ability to deliver light weight items cheaper over the last mile than FedEx or UPS could using its own contractors or employees and due to the advantages that its retail footprint offers both in terms of selling parcel delivery services or offering pick-up of parcels that were not delivered because no one was at home.

Unfortunately for the Postal Service these advantages are tenuous.   Postal Service competitors are now exploring secure alternative delivery options for households that reduce delivery costs per package by eliminating delivery to the home itself and more importantly eliminating multiple delivery attempts when no one is home when the first attempt is made.   These carriers are exploring the marketing campaign needed to implement the parcel pick-up and delivery systems sold by KEBA and now installed by Austrian Post, DHL Deutsche Post, Post Danmark, Posten Norge, and PTT Turkey.

If such a system is installed in the United States, the Carrier could provide the recipient with the location of the secure parcel box and the code for retrieving their parcel as part of the track and trace record. Such boxes could be placed outside of existing retail outlets like FedEx Office, Staples, UPS Stores or other contracted location offering 24-hour access to delivered parcels.  Without the need for employees to staff a parcel location, private sector carriers could offer full service parcel and express services in communities that are currently too small for even franchise or contract locations.   Such a system would also allow private sector carriers to offer six and even seven day delivery without requiring it to go to every address that receives a parcel.   This would be a major advantage if the Postal Service eliminates its Saturday delivery service.

This blog discussed how such a system could expand the retail presence of the Postal Service last August through the use of such automated parcel systems. in two posts.

Should the Postal Service Close All Post Offices?

Marketing the Pakstation


If competitors chose to do this first, then the Postal Service risks the loss of a significant share of its parcel delivery business that exist because competitors chose it as the delivery contractor.   The Postal Service could further lose business from retail customers who find that the automated solutions of competitors are more convenient.