Additional Indicators that Online Shopping is Changing the U.S. Economy

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Two stories today illustrate how e-commerce is changing the U.S. economy. First, there are indications that demand for shipping boxes is rising fast enough to give the manufacturers of containerboard used to make these boxes sufficient market power to both raise  prices and make price increases stick.   Investment Analysts from both Goldman Sachs and Jeffries both released Goldman Sachs both raised their ratings of containboard manufacturers to reflect their belief that the pricing power that these manufacturers now have is sustainable. Second, in its conference call yesterday, Wolverine Woldwide, a manufacturer of a broad range of casual and work shoes and boots stated that nearly 15% of its sales were [...] Read more »

USPS Delivered a Record Share of FedEx Ground Shipments

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Between December 2012 and February 2013, the U.S. Postal Service delivered a record 35.6% of all FedEx Ground shipments.  The Postal Service delivery was provided as part of the FedEx SmartPost product which experienced a 26.4% growth in shipping volume during FedEx’s 3rd fiscal quarter that ran between December, 2012 and February, 2013. The following chart illustrates the growth in Postal Service delivered shipments as a share of FedEx Ground shipments.     The Postal Service share of FedEx Ground deliveries has steadily grown over the past five years.   The Postal Service’s share of FedEx Ground deliveries in the 3rd quarter of FedEx’s 2013 fiscal year represents a 9.6% increase [...] Read more »

If the USPS Is In Trouble, Why Did Mailing Industry Stocks Rise Sharply?

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Today the Postal Service reported its financial results for fiscal year 2012.    Headlines of the wire services and major newspapers all suggested that a calamity is just around the corner. Bloomberg - U.S. Postal Service on a ‘Tightrope’ Lost $15.9 Billion   Washington Post - Postal losses cap year of payment defaults, little help from Congress; more red ink in 2013   Reuters – U.S. Postal Service has record loss, sees “fiscal cliff”   Wall Street Journal - U.S. Postal Service Reports Record Loss   Associated Press - Post office reports record loss of $15.9B for year   Pittsburgh Business Times – Postal Service: ‘Far short on liquidity’   How Did Postal Industry [...] Read more »

Is the Growth of Parcel Delivery Accelerating?

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The post, Growing USPS, UPS  and FedEx Volume Is Not Just from E-commerce, used an exponential trend-line to illustrate the rapid growth in the share of deliverable retail sales that are delivered.   However, reports from retailers about the relatively recent growth of their e-commerce business raised questions about the possibility that the shift toward delivered retail sales may be accelerating.  To test this hypothesis, I plotted two exponential trend lines.  One using data from 1999 through 2007 and a second .   using the data from 2008 – 2012 The plot of the two trend lines can be seen in the following chart.   As was expected the trend for the 2008-2012 data is growing [...] Read more »

United Parcel Service Earnings Report Has Good News for the USPS

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United Parcel Service reported earnings press release today provides hints of a changing parcel delivery marketplace that favors the parcel delivery services that the Postal Service does best. Volume grew across all products as ground rose 3%, UPS Next Day Air® increased 5% and deferred air climbed 8.6%. The majority of the improvement was driven by large e-commerce customers shipping low-weight residential packages. The shift to residential deliveries has resulted in UPS’s revenue per piece rising far less than its change in rates from a yar ago.  UPS states that the change is due to a customer and product mix.  The change in customer mix describes the growing proportion of UPS”s [...] Read more »

Examples of Proprietary Address at Amazon and the USPS: It’s Not Just the Format

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The posts, Amazon Goes Head to Head with USPS with Parcel Lockers in Virginia, and Amazon Has 30 Parcel Lockers in Manhattan, Queens and Brooklyn asserted that Amazon parcel lockers are proprietary addresses. This raised two questions.  1) What constitutes a proprietary address and 2) Is Amazon using a unique addressing standard for its parcel lockers. What is a Proprietary Address A proprietary address is any address that limits who may send or deliver to that location.  Amazon’s parcel lockers are proprietary as only shipments shipped by Amazon and sold by Amazon or a merchant that uses fulfillment by Amazon has access to the Amazon’s Parcel Lockers. No other merchant [...] Read more »

Amazon Goes Head to Head with USPS with Parcel Lockers in Virginia

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Amazon has now introduced parcel lockers to a third metropolitan area in the United States by installing seven parcel lockers in seven 7-Eleven’s in Northern Virginia. By installing parcel lockers in the same general geographic area as the Postal Service, Amazon clearly indicates that its parcel locker delivery system is a direct competitor with delivery by the U.S. Postal Service, United Parcel Service and FedEx. While Amazon’s parcel lockers are in the same general geographic area, Amazon has made some real estate and operating/software decisions that may provide Amazon with a competitive advantage among customers that find locker delivery attractive Amazon’s Lockers are in More Up-market Zip codes than Gopost Amazon [...] Read more »

Amazon Has 30 Parcel Lockers in Manhattan, Queens and Brooklyn

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A previous post on Amazon’s expansion of its parcel locker network understated its investment in this delivery technology in New York City. Amazon now has 30 parcel lockers in New York City and not the 20 that were reported last month. As the chart below shows, Amazon has 5 lockers in Brooklyn, 7 in Queens and 18 lockers in Manhattan including one on Roosevelt Island.  Combined with the 10 Amazon has in and around Seattle, WA and the 7 in Northern Virginia, Amazon is now far ahead of the Postal Service in implementing goPost. Parcel Lockers Create Proprietary Address and a Competitive Advantage for Amazon Amazon’s network of parcel lockers [...] Read more »

Making Parcel Post a Competitive Product Poses Less Threat to Rural Areas than Public Representative States

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The Postal Service has petitioned the Postal Regulatory Commission to make Parcel Post a competitive product. (Docket No. 1012-13) If approved this would remove nearly all parcel products offered by the Postal Service from price and service regulations. The proceeding has received little interest and only two parties provided comments, David Popkin and the Public Representative. Neither party challenges the Postal Service’s contention that Parcel Post is not a market dominant product. The Public Representative agrees that the Postal Service only has a small share of the market for parcel shipments sold at a retail counter. The only concern that both parties raise is access retail locations of either FedEx [...] Read more »

The Future of Parcel Delivery: One Hour Delivery Windows

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Making the business-to-consumer e-commerce market work requires making the delivery experience better and less expensive than it is now.  The biggest problem couriers are working to solve is missed deliveries that require a second or third delivery attempt or pick-up from a depot once a missed delivery notice goes out. Missed delivies raise shipping costs and make buying online less convienient. In the United States, both FedEx and UPS allow shippers to send parcels to retail locations rather than have them sent to their home address.   The Postal Service has just started a test of GoPost parcel lockers that will offer customers a 24-7 option for parcel pick-up near their home.  However, many if not most [...] Read more »