Understanding Postal: Not Your Father's Postal Service

The Postal Service is also working on mobile applications and online services to help it provide customers with more control over their parcel deliveries. It's developing new parcel delivery lockers and bigger mailboxes for some customers to accommodate parcel delivery in an effort to reduce the dreaded "notice left" slips that often force customers to drive to their local post office to pick up parcels when delivery was attempted but no one was home.

And What About Pie?
While the USPS pursues a bigger piece of the parcel market pie, it may also be delivering real pie! The USPS has partnered with Amazon to expand the retailer's pilot testing of grocery delivery in select urban markets. The PRC has just granted the USPS's request to conduct a two-year test of "customized delivery," which includes the grocery pilot with Amazon but could also include other items. The deliveries are made in the early morning hours when vehicles typically are idle, and are handled by the Postal Service's carriers.

How Far Can the USPS Go?
Those familiar with the laws that govern the Postal Service, most notably the Postal Accountability and Enhancement Act (PAEA), which was signed into law in 2006, know that the USPS can only go so far in terms of the "nonpostal" products and services it can offer. Nonpostal generally means those products and services that aren't directly related to the delivery of letters, printed matter or mailable packages.

The PAEA repealed the USPS's previously unlimited authority to offer nonpostal services, and prohibited it from offering new nonpostal services. There were 12 nonpostal services the USPS was already offering at the time the PAEA was enacted that were grandfathered into the legislation — e.g., passport photo services, sale of advertising to support change-of-address processing, and others. Beyond that, the Postal Service must request approval from the PRC to offer experimental products, which it has done for numerous products since PAEA was enacted. It also performs discretionary services for federal agencies, such as accepting passport applications for the State Department.

The USPS can't, however, offer nonpostal products that aren't related to the delivery of letters, printed matter or mailable packages, "including the acceptance, collection, sorting, transportation, or other functions ancillary thereto," per the PAEA. Those include potential revenue streams discussed in the past few years such as banking services and insurance.

Within the legislative definition of what constitutes "postal" products and services, however, there's a lot of opportunity for the USPS to introduce new products/services. For example, it can introduce new or experimental services as extensions of existing products/services, such as the "customized delivery" experimental product it currently is testing with Amazon grocery delivery. Furthermore, the USPS now has a two-year period approved where it can expand the service to other retailers with prepackaged products for delivery.

The bottom line is that all eyes will be on how the Postal Service performs with its package delivery side of its business through the holiday season, as well as its new forays into delivery of other retail items such as groceries.

Kathy J. Siviter is the president of Postal Consulting Services, a consulting firm serving commercial mailers. Kathy can be reached at kathys@postalconsulting.com.