USPS Plans to Make Priority Mail a Guaranteed Delivery Service

By Ina Steiner 
EcommerceBytes.com 
August 19, 2013

U.S. Postmaster General Patrick R. Donahoe and Chief Marketing and Sales Officer Nagisa Manabe hosted a web conference call on Wednesday with reporters to discuss recent changes to Priority Mail and its new business strategy to drive USPS growth in the shipping marketplace.

In response to a post-briefing question, the Postal Service told EcommerceBytes that its future plans include moving to a guaranteed service for Priority Mail day-specific delivery.

Background - Changes to Priority Mail
On July 28, the USPS rebranded Express Mail to "Priority Mail Express," and added an estimated delivery time designation on shipping labels and in the USPS Tracking information. It also added free insurance for domestic Priority Mail ($50 for most customers, $100 in insurance for high-volume shippers who are Commercial Plus customers).

EcommerceBytes described the five things online sellers should know about the postal changes in this July 3rd Newsflash article and cleared up some questions sellers had about insurance in this July 9th article, but the changes were ushered in with little fanfare from the postal service until its August 14th press briefing.

Why the Changes?
The Postmaster General referred to the changes to Priority Mail as "a bright spot in the business in terms of an important refresh in one of our core offerings in our marketplace." As EcommerceBytes noted, the USPS experienced solid gains in the package business in its third fiscal quarter, which it attributed in large part to growth in ecommerce, when shipping and package revenue spiked 8.8 percent for the quarter.

"We do have some flexibility in our business model to innovate especially around the package side of the business," Donahoe told reporters. "We've taken advantage of those opportunities and will continue to do so," and he said the Priority Mail changes have great potential to drive new revenue.

The Postal Service's Manabe said in terms of business strategy, "our refresh of Priority Mail is really geared to fill some competitive gaps in the shipping marketplace, and by filling these gaps, we expect to drive strong revenue growth in our package business."

Manabe said ecommerce was the driving force behind the Postal Service's growth in the package delivery business. "People are ordering products online and are having them delivered at ever-increasing rates. We've been able to capitalize on that trend with shipping options that are secure, affordable, reliable, familiar and available in every geography. We've also been effective with innovations in our package category such as flat rate shipping and marketing efforts such as, "if it fits, it ships.""

Confusion over Day-Specific Delivery Designation
Effective July 28th, Priority Mail packages began displaying an estimated service of 1 day, 2 days, or 3 days - the estimated delivery date is displayed on the payment receipt, online shipping label and in the USPS Tracking information.

What causes some confusion is the fact that Priority Mail Express is a guaranteeddelivery date similar to services from UPS and Fedex, while the Priority Mail 1 Day, 2 Day, and 3 Day dates are not guaranteed - they are estimates based on the package's departure and ship-to location, a concept that many have trouble grasping when first encountering the delivery time designations.

EcommerceBytes asked if the delivery time designation took into account Sundays, and if not, whether there had been any thought to change 2-DAY to something more like "2-Business Days," for example. The response from a USPS spokesperson following the call was, "Day specific delivery follows normal, 6-day mail delivery business hours for the Postal Service. As most know, that's Mon-Saturday."

We also asked if there been any thought to add the word "estimate" to the delivery time designation. The spokesperson said, "Future plans do include moving to a guaranteed service for day-specific delivery. Customers can always opt for Priority Mail express for guaranteed service. The 1-2-3 day-specific delivery time is when we expect for the mail to arrive based on the origin and destination of the package."

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

PB selling its Managed Services division to Apollo Global Management in Q4

PBI announced they will be selling its managed services division to Apollo Global Management, LLC for about 400 Million dollars.  The deal is expected to close in the fourth quarter.

For the last 15 years many mid to large companies have outsourced their mail and document services to Facilities Management (FM) companies to concentrate on their core competencies

So what will this mean to the very competitive FM marketplace that frankly has very few competitors with national coverage?  Currently, virtually all of the (non PB) FM players shun PB mailing equipment and services since they are direct competitors.  Neopost and Hasler are the main beneficiaries of these relationships since they are the other large provider.

Will the new Apollo FM operation open up and allow their analysts freedom to choose the best qualified product value for the application or will the blinded loyalty to the PB brand continue?  If the former is adopted how will Ricoh, Oce and others respond?  Will they consider offering "that which shall not be named"?  This should be interesting to follow.

Details reported by the WSJ, 7/30/13: For its part, Pitney Bowes plans to focus on its mail and digital-commerce businesses. The company has been consolidating its business to reduce costs.

Pitney Bowes also reported that it swung to second-quarter loss of $4.6 million, or five cents a share, compared with year-earlier earnings of $104.2 million, or 50 cents a share. Excluding restructuring charges, write-downs and other items, adjusted earnings from continuing operations were up at 52 cents from 51 cents.

Revenue eased 0.7% to $1.16 billion as double-digit growth in its production mail and mail services mostly offset weakness in other areas.

Analysts polled by Thomson Reuters recently expected per-share earnings of 43 cents on revenue of $1.19 billion.

Pitney Bowes shares were up 1.8% at $14.99 in recent premarket trading. Apollo shares closed Monday at $26.60 and were inactive premarket.