Amazon’s recently-announced partnership with the U.S. Postal Service, which expands delivery offerings for Amazon Prime members to include Sundays, offers a promise of much needed revenue for the USPS and improves its relevancy in the parcel delivery business.
The USPS has sustained a $41 billion net losses since 2007, and faces ongoing steady declines in volume, according to Shipware president and CEO Rob Martinez.
“Apart from legislative changes, it desperately needs to find new revenue sources,” Martinez said. “Partnerships with Amazon and others are part of the solution.”
Tim Sailor, owner of Navigo Consulting Group, adds that consumers rank delivery options pretty high when they consider which ecommerce sites to make a purchase from.
Martinez said the USPS deal cannot be exclusive with Amazon, because the USPS cannot create an exclusive service category for one customer. Also, Martinez says that in specific regions, Amazon already partners with local courier companies that offer Sunday delivery.
While Martinez hasn’t heard the specifics on the test period or parameters of the partnership, if Sunday delivery takes flight, he expects USPS will roll it out to other shippers.
Martinez said by offering Sunday delivery, Amazon trumps smaller retailers who do not have the scale to follow this strategy, while offering an additional benefit to the estimated 15 million Amazon Prime subscribers.
Sailor says the USPS fostering other partnerships with other merchants could be an obstacle due to scale, since very few retailers have the scale Amazon does. However, Martinez says he sees the USPS fostering more partnerships with ecommerce merchants or marketplaces.
Given the limited rollout, Sailor says he doesn’t think the shipments that Amazon would divert from FedEx and UPS to the USPS for Sunday delivery would have a significant financial impact to UPS’s and FedEx’s overall revenues.
Martinez said its his guess that Amazon first approached FedEx and UPS requesting Sunday delivery before it was offered to USPS, and both turned it down after exploring the costs versus the market potential.
Amazon did not return calls for this story.
Amazon announced on Nov. 11 that it would partner with the USPS and will begin Sunday delivery for its Amazon Prime memebrs in the Los Angeles and New York metropolitan areas.
Amazon Prime members who receive unlimited free two-day shipping can now receive their packages on Sundays in these areas.
The service will roll out to a large part of the U.S. population in 2014 including Dallas, Houston, New Orleans and Phoenix.