Meridian Star

New Today

November 22, 2012

Cash-strapped post office tests same-day delivery

(Continued)

WASHINGTON D.C. —

Postal officials, in interviews with The Associated Press, cast the new offering as "exciting" and potentially "revolutionary." Analysts are apt to agree at least in part, if kinks can be worked out.

"There is definitely consumer demand for same-day delivery, at the right price," said Matt Nemer, a senior analyst at Wells Fargo Securities in San Francisco. "The culture in retail traditionally has been to get a customer into the store, with the immediacy of enjoying a purchase being the main draw. So same-day delivery could be huge for online retailers. The question is whether the economics can work."

He and others said that consumers are a fickle lot when it comes to shipping, seeking fast delivery, but also sensitive to its pricing. Many will order online and pick up merchandise at a store if it avoids shipping charges, or will agree to pay a yearly fee of $79 for a service such as Amazon Prime to get unlimited, free two-day delivery or even purchase a higher-priced item if it comes with "free" shipping.

"Customers do like same-day delivery when it gets very close to a holiday or it otherwise becomes too late to shop," said Jim Corridore, analyst with S&P Capital IQ, which tracks the shipping industry. "But while the Postal Service has the ability to deliver to any address, they are not always known for their speed. To increase their speed might prove to be a much more complex offering than they're thinking about."

As the Postal Service launches Metro Post and sets pricing, its target consumer is likely to include busy professionals such as Victoria Kuohung, 43. A dermatologist and mother of three young children, Kuohung for years has gone online for virtually all her family's needs, including facial cleansers, books, clothing, toys, diapers and cookware.

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