March 2020

The rise of same-day delivery packages is not seen as a threat to the US Postal Service, according to a January 2020 report by the USPS Office of Inspector General (OIG). The January report suggests that focusing on next-day delivery is a better use of resources for the USPS. 

According to the OIG’s report, if same-day delivery continues to grow at the current rate, it could change last mile delivery and have “tremendous implications for the US Postal Service and other traditional carriers.”    However, the report also states that current volumes of same-day delivery do not appear to be a significant threat at this time.  Preference for same-day delivery seems to be highest with urban millennials, who are almost twice as likely as baby-boomers to want the service.  But even among millennials, less than 8% of total deliveries are same-day. 

There are a variety of reasons that consumers decline same-day delivery.  The five most often cited reasons are 1) cost 2) consumers are willing to go to the store to get what they need 3) consumers don’t need the item that quickly 4) consumers can shop on line and then pick up items at the store, and 5) consumers are not home to receive the items.

From the perspective of the retailer, same-day delivery is expensive.  An ordered item is delivered directly to one address, with the delivery person returning to the store following that one delivery.  This “point-to-point” delivery can raise the price of delivery to as much as $10 per item.  The OIG report states that grocers tend to lose $2 per delivery on same-day delivery grocery orders.  “Retailers are experimenting with same-day delivery but have not found a way to make it economically sustainable” according to the OIG Report.

The report also states that despite current resistance to same-day delivery, and the high cost the USPS should keep informed about this “fluid market.”   The OIG states that “New models, players, technologies, and growing demand might turn same-day delivery into a profitable venture.”  Should this market change, the USPS is advised to be prepared to adapt.    

The US Postal Service Office of the Inspector General investigates topics of interest to the USPS and writes reports detailing its investigation and conclusions.  The report discussed above,  “Same Day Delivery: Implications for the USPS” was released in January 2020. 

To Read the entire OIG Report click here

To read more click here