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OM in the News: The “Last Mile” and USPS

November 11, 2017

As consumers demand ever-quicker and convenient package delivery, the US Postal Service wants to boost its business this holiday season by offering what few e-commerce retailers can provide: cheap next-day service with packages delivered Sundays to your home. Retail giant Walmart says it is considering the Sunday option, which could reshape weekend shopping trips to the mall.

The program, available in 20 major US cities, allows consumers to place online orders with participating retailers before a cutoff time Saturday. Postal carriers pick up merchandise from local stores for delivery the following day, similar to the Sunday package deliveries it now handles almost exclusively for Amazon in much of the US.

“The next-day weekend service is part of the Postal Service’s aggressive push into the parcel business at a time when its more lucrative first-class mail is declining in the digital age,” writes the Boston Globe (Nov. 4, 2017). With Amazon continuing to raise the bar of ‘‘free shipping’’ conveniences, from 1- or 2-day package arrivals to keyless in-home delivery via couriers, the financially beleaguered post office is billing itself as the trusted, low-cost carrier already serving every US household.

Bolstered by e-commerce growth and its Sunday operations, the Postal Service will reach new highs this year in holiday package delivery, with nearly 850 million parcels delivered from Thanksgiving to New Year’s. That 13% increase from 2016 would exceed the single-digit growth for UPS and FedEx, putting the post office on track to capture 45.6% market share in peak holiday deliveries. The post office’s growth is due in large part to its established network in the ‘‘last mile,’’ the final and usually most expensive stretch of a package’s journey to a customer’s door. UPS and FedEx already subcontract a chunk of their last-mile deliveries to the post office.

Classroom discussion questions:

  1. Why is the “last mile” an important OM issue?
  2. What are the strengths and weaknesses of the USPS model to Sunday deliveries?
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