Merchant Innovation

E-Commerce Boost Delivers Strong Post Office Sales

Given how e-commerce is largely seen as the future for economic potential and merchant innovation, it seems counterintuitive to think that it’s also helping out something as stereotypically outdated as the Post Office. Yet, according to the USPS’ Q1 2015 numbers, e-commerce is doing great things for its shipping business, even as other revenue of areas continue to struggle.

The U.S. Postal Service reported on Feb. 6 that there was a net loss of $754 million, a steeper decline than the $354 million loss year over year, largely due to high costs and a 1.1 percent YOY decline in first-class mail. Operating revenue, though, increased during the quarter by 3.4 percent to $18.7 billion, largely thanks to political mailings in November and holiday e-commerce driving shipping and package volume up 12.8 percent as the USPS places more emphasis on improving package delivery and customer service.

“Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers,” Postmaster General Megan Brennan said in a prepared statement obtained by Reuters.

Brennan took over in February from retiring Postmaster General Patrick Donahoe, whose four-year tenure was marked by tensions with Congress and postal workers regarding potential cuts to service or jobs. The Post Office continues to struggle with a 2006 congressional mandate requiring it to pre-fund health care for future retirees, leading to a string of defaults on the pay installments. Declining first-class mail volume has also hampered the USPS, though stamp increases have helped increase revenue by 3.7 percent despite the volume drop.

Brennan also suggested that shipping will become the prime focus for the Post Office in the year ahead. With e-commerce expected to keep growing as a percentage of all retail sales, and with brick-and-mortar retail stores putting more emphasis on omnichannel service, the USPS can benefit from being the main shipper of choice for consumers and retailers.

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