In its conference call, United Parcel Service (UPS) repeatedly touted the success of its UPS My Choice program. The UPS My Choice program has two features that are similar to what the Postal Service’s gopost parcel lockers will likely offer. They provide customer notification of delivery and provide delivery to a location with convenient hours when the recipient cannot be at home to accept receipt of their parcels. The UPS My Choice differs from what gopost will offer in that having parcels delivered to a UPS store requires either a $5 per package or $40 annual fee while gopost will more than likely be a free service.
UPS has offered UPS My Choice since September, but it has signed up 3/4 of a million customers and delivered 3 million parcels to UPS stores by the end of December 2012. UPS’s experience with UPS My Choice shows that having both more information about when a delivery might occur and an alternative delivery location is attractive to frequent on-line shoppers. On average, UPS My Choice registrants had 4 shipments delivered to a UPS store in the quarter. As not all registrants were willing to pay for delivery to a UPS store, those that diverted shipments to a UPS Store more than likely received significantly more than 4 shipments during the last three months of 2012.
Postal Service Gains From UPS Experience Wtih UPS My Choice
The Postal Service was fortunate that UPS went first with its UPS My Choice program, as UPS’s experience provides the Postal Service with valuable information about both marketing gopost and potential customer acceptance. Based on what UPS has publicly stated, one can expect that gopost will:
- be attractive to frequent on-line shoppers;
- find its highest acceptance rates in higher-income communities that currently generate significant parcel traffic as well as communities where most adults work; and
- have an acceptance rate higher than what UPS has experienced if the gopost service is offered at no cost to the recipient;
Based on this information, the locations that the Postal Service chose include a large number of on-line shoppers that are similar to those that have found UPS My Choice attractive. Some of the six gopost locations are located near communities that have some of the highest income zip-codes in Northern Virginia and are known for having a large proportion of households in which all adults work. Those gopost locations that are near communities that have the highest income per household in the surrounding neighborhood should do better than those near lower-income communities as income and the number of parcels received per capita is correlated.
UPS My Choice Costs Provide the Postal Service With A Second Advertising Message
UPS My Choice has focused on the convenience aspect of the service to convince individuals to sign up. The Postal Service appears ready to use a similar marketing message. Given that UPS charges for using an alternative delivery location, the Postal Service should also mention that there is no cost of using GoPost as that will both provide a competitive advantage and more than likely entice more people to register. Getting recipients registered and telling potential shippers who is registered could provide the Postal Service with a competitive advantage in parcel shipping, whether the online retailer ships directly with the Postal Service or only uses the Postal Service for delivering the last mile.
Success of UPS My Choice and Amazon Parcel Lockers Suggests Time to Prepare Phase Two and Three of gopost is Now
Finally, the success of UPS My Choice, along with the success that Amazon has had with consumer acceptance of its parcel lockers suggests that the Postal Service needs to prepare now to ramp up deployment of a second phase and possibly a third phase of gopost parcel lockers even before initial consumer testing is completed. At a minimum, the Postal Service needs to add locations in some of the higher income zip codes of Northern Virginia. Communities that appear ideal include: Clifton, Crystal City, Fairfax Station, Great Falls, Herndon, McLean, Pentagon City, Reston and Vienna. The third phase needs to include locations in the District of Columbia and Maryland suburbs.
By preparing now a quick implementation of a second phase deployment, the Postal Service will follow Amazon’s implementation approach which doubled the number of location within a few weeks of opening the first dozen in the United States. The third phase deployment would represent the recognition that getting the biggest bang for its broadcast and newspaper advertising dollar, it will need to serve communities in the District of Columbia, Maryland and Virginia.