This summer, the U.S. Postal Service is set to begin an ambitious trial program that will invite online sellers and other shippers to access its network directly for speedy local and regional package deliveries.
Senior leaders at USPS on Monday touted the new Connect program as a major piece of the agency’s broader, 10-year plan to become financially sustainable as it reorients itself around a thriving packages business.
“We believe there is big opportunity to add $25 billion in net revenue growth by expanding access to our network for package delivery,” Postmaster General Louis DeJoy said in remarks at the National Postal Forum, a conference held virtually this year.
“We intend to redesign our network to provide packages senders with greater ability to reach consumers same-day, one-day and with two-day delivery,” DeJoy said. “This is what the market needs, and we are uniquely positioned to be the provider of choice.”
While the Postal Service has been grappling with declines in First Class Mail and struggling to meet payment obligations related to its retired workforce, the agency sees growth in shipping and the surge in ecommerce that’s driving it as a bright spot.
A year of physical retail stores being closed and people working from home owing to the pandemic only accelerated the shift to online shopping, USPS executives noted.
“Since the Covid-19 pandemic started, there has been a tremendous surge in online shipping,” said Jakki Krage Strako, an executive vice president and chief commerce and business solutions officer at the Postal Service. “Consumer behaviors have fundamentally changed. And we expect continued long-term growth for package delivery.”
USPS Connect seeks to capitalize not only on the growth of ecommerce, but also to help sellers meet the increasing expectation among shoppers for rapid delivery, Strako said.
“Consumers want their orders fulfilled and delivered quickly, and with complete visibility,” she said.
The Postal Service is planning to operate Connect with two service and delivery tiers: local and regional. Connect Local, which the Postal Service plans to debut this summer in up to 30 urban, suburban and rural areas, will cater to small businesses that send the bulk of their packages to customers who live nearby.
With Connect, sellers will be able to drop packages off at their local post office, either for next-day delivery or, if they drop them off in the early morning, same-day.
“So if you’re a micro or a small business that makes regular deliveries within a relatively small geographic area, this will give you a tremendously convenient and affordable shipping option to reach your customers with same-day and next-day service,” Strako said. “This will definitely give you a competitive edge.”
For sellers with larger volume and a more geographically diffuse customer base, USPS Connect’s regional service might be a better fit, where sellers will be able to drop their packages off at their regional service hub for next-day delivery.
The Postal Service is also offering a service for handling returns with its Connect initiative, another nod to the changing habits of online shoppers.
“One of the most important trends in ecommerce of the past decade is the sustained consumer behavior to shop online, try something on at home, and then return if it is not quite what I wanted,” Strako said.
“It’s an enormous part of the ecommerce brand experience to offer a simple, low-friction means for the consumer to return a purchased or trial item,” she said. “Our goal is to be the preferred returns provider for both the business as well as the consumer.”
Taken together, the local, regional and return services the Postal Service is planning under Connect are “a major development in the way we support the ecommerce marketplace,” Strako said.
“We believe there is a large market for affordable local and regional shipping,” DeJoy said.
“With our new network structure, we can provide some excellent solutions for large and small businesses,” he added. We want more shippers using the Postal Service, and we want our trucks filled with packages.”