U.S Postal Service Takes Back Its Territory

Earlier this month, the U.S Postal Service announced that they have made a deal with Amazon delivering groceries on a test basis. The U.S Postal Service is a big player in mail delivery services, handling 40% of the world’ mail and visiting homes and businesses alike six days a week.

USPS is now lowering their parcel delivery prices during a time where their  competitors (FedEx and UPS) plan on increasing their prices. Both FedEx and UPS fear that with the recent changes USPS has been making with their services and prices will steal away their customers. This rings true in the case of Amazon, when just last December both FedEx and UPS misjudged the amount of holiday packages and many customers did not receive them until after Christmas.

FedEx and UPS however do not think it’s fair for their companies because USPS a is a government owned delivery service and has a monopoly on the business. This being said, it is also true that USPS has been suffering from a decline over the years due to the creation and embrace of e-mail.

One possible solution that Lenoard proposed was that congress could allow for the USPS  to leave the letter monopoly and let firms and couriers compete for this business like European posts have done. This would give the USPS the opportunity to focus soley on the parcel delivery service and would also avoid financial collapse. Lenoard also goes into the topic of USPS becoming more attractive to private investors that have helped European posts. If this were to happen, then the money that could come from private investors could help USPS with their aging trucks, making it more cost efficient and possibly speeding up their delivery.

USPS’ recent business decisions displays examples of the three strategies of competitive advantage we discussed in chapter two. First USPS competes with FedEx and UPS in differentiation in their deal with Amazon by delivering groceries. I personally think this is pretty unique because it breaks away from the association that USPS has with just letters and packages, they open up the idea to their customers that they can now deliver groceries, creating a more universal delivery service. Secondly, USPS uses competitive advantage in competing on costs by lowering their prices, allowing for cheaper shipping and delivery services than that of their competition. Lastly, USPS is becoming more responsive. They are allowing themselves to be cost effective, flexible by matching market changes in their new grocery deliveries, and reliability by meeting delivery schedules.

I personally am an USPS person, I have my packages delivered by them and I receieve majority of my packages through the USPS. I find their services of great quality and timely delivery.

What type of delivery service do you use and why? If you use either FedEx or UPS would you change your mind after hearing about their delays in their delivery, why or why not? What else could USPS do to give them a competitive advantage?


Source: http://www.businessweek.com/articles/2014-09-11/amazon-casts-its-vote-with-the-postal-service

10 thoughts on “U.S Postal Service Takes Back Its Territory

  1. I liked reading your analysis of the USPS versus FedEx and UPS. I thought you touched on all the main points well. Personally, I use whatever service is cheapest for what I am shipping or having delivered. In many cases we do not have a choice in who ships our packages. Some times USPS ships my Amazon packages other times UPS does. I have no complaint with any service yet. I might consider using USPS more if their shipping capacity is greater than either FedEx or UPS and their prices drop further. My work uses FedEx primarily. I think USPS should get more money to upgrade their vehicles. Just as you mentioned, because I feel that other than their slow and small vehicles USPS meets or exceeds all other shipping aspects (such as good shipping times, convenient locations, etc.). I did not know about the new Amazon deal for grocery delivery. I think that is really interesting and might help USPS get back on top after all the issues it has been having financially. I know that USPS has been trying to re-brand with all their new commercials to be seen as more reliable and cheap. I guess we will see how everything plays out over the next few years as to who becomes the shipping king.

  2. When I need to ship something, I usually use whichever delivery services are the cheapest and most convenient. Usually, that means USPS or UPS. Either USPS or UPS ships the items I buy from Amazon and I really have not had any major problems with either of them. If anything, USPS would be the one that I would complain about, but that has to do with the mail person taking awhile. I never experienced the UPS and FedEx Christmas delays because I got my orders in the first week of December. So, that delay hasn’t changed my overall opinion on either company. Overall, I will probably continue using any of the delivery services as I have in the past.

  3. I believe each of these companies has a reputation which grabs the consumers. USPS may be looked at the cheapest, while FedEx and UPS may have the fastest service. When I use a delivery service, I look at my options of the price and how fast it can ship out. USPS teaming up with Amazon can definitely bring in consumers to use their service. However, FedEx and UPS carry a strong reputation. Because of this, I do not believe that USPS can become a monopoly as you mentioned. Each company has their strengths and weaknesses.

  4. The cornering of the market by means of government control is a issue that has long standing across many cultures and throughout history. The most recent issues facing the United States Postal Service (layoffs, threat of bankruptcy, lacking customer service, etc) have given rise for competitors to swoop in and capitalize on the market.
    FedEX and UPS are prime examples that you discussed. In response to these advances, the USPS has drastically lowered their parcel delivery rates in order to regain a stronghold, while being backed by the government – which all but ensures that the business will not completely fail. I personally agree that his is unfair and I have also have had much better service provided by these competitors. The inability of a business to fail due to such a backing prevents positive change and ultimately heeds progress. This also prevents a fair market place from occurring and restricts further growth.

  5. I use USPS as well, but some of the things they is illogical and wasteful. My friend shipped a book once in one of their packages that was labeled priority, but he didnt ship it priority. He tracked the package and it was on the other side of the country near its destination, only a week later did he receive it back and they told him he needs to ship it in the adequate package. It was already 98% of its way to the destination and they wasted the resources to bring it back. They should stop wasting time on what the package looks like, and just ship what is inside and paid for. I shipped a book once in a brown paper bag and it went through all the way. They just do mindless things like what they did to my friend. Once I had a similar issue, I saw my package get to a destination in wrong direction and saw it come back across the country to the other side later on instead of getting it to the right spot the first time. USPS is my go to shipping provider, I just wish they were consistent.

  6. Mariam, this is definitely an interesting post. I myself am a UPS person when it comes to getting my packages shipped to me, but when I want to send something out, I use USPS. It’s strange, I know. But over the years this is what seemed to work best for me. I think it largely depends on the region you live in as well as the region that you are planning to ship to when it comes to what carrier you use. Different regions seem to produce different results for me. I think if USPS could find a way to provide better tracking of the package, it might provide a better advantage.

  7. I use USPS personally and find them to be the most consistent with their delivery times. I think that some government monopolies are actually helpful. One that comes to mound is the water department it is a government monopoly that supplies water to a massive number of people for basically cost. In experiments where municipalities have privatized the water supply prices sky rocketed and quality degraded. I say keep doing what you’re doing USPS because paying 50cents to deliver a package across the country in a couple of days is a wonder all in its self.

  8. I can honestly say I am fond of whatever service has a great price. However, I feel that USPS has come a long way. Fedex and UPS have become such competition. You look at UPS who is exclusively known for their operational success; USPS just doesn’t seem to compare. But recently, USPS has seemed to lower their prices, offer more services to better fit the customer in order to join the competition again. I think if USPS continues to makes these changes, they will be able to gain their consumer base back and continue to grow.

  9. Like most of the people commenting, I also see which service is quickest and cheapest. Personally, I have had a great experience with USPS. Sending packages out with prepaid shipping labels has always been easy and they would get to their destination quickly and on time without having to pay an outrageous price. Another way they seem to be upping their game in this holiday season is shipping even on Sundays. It’ll be interesting to see if they can see a higher influx of shipments from this new incentive.

  10. Really interesting post about the USPS. I did not know that they had signed a test delivery service for Amazon for their groceries. I think like many individuals I often times just choose the cheapest shipper. This is one area where I do not have any brand loyalty, whether this is good or not I’m not sure. During the past few holiday seasons you seem to always see some video of a Fedex or UPS driver blatantly destroying a package, but I don’t think I’ve seen a USPS worker doing this.

    I’m not sure where else USPS could change to create a competitive advantage. They seem to be making a concerted effort to change their business model. It will be interesting to see how they will continue to innovate to get into the black and stay relevant.

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