(September 26, 2014) The U.S. Postal Service wants to save you a trip to the supermarket.
The USPS is seeking approval from the Postal Regulatory Commission to deliver fresh groceries to private residences. The Postal Service submitted a proposal for a two-year test of the plan on Tuesday. It would offer the service in multiple cities and could roll it out on a broader scale by the end of October.
In the plan, the Postal Service would partner up with retailers who would drop off orders of groceries and other prepackaged items at local post offices between 1:30 am and 2:30 am. The USPS would then deliver the groceries to private homes between 3 am and 7 am.
Yahoo Finance Senior Columnist Michael Santoli says the plan makes sense from the USPS’s perspective. “We have a human being going to this address no matter what.” Adding a package to that route, he says is “incremental revenue without necessarily being also an incremental expense.”
In its filing this week, the U.S. Postal Service said that this plan could bring in an extra $10 million a year. However, the agency lost $5 billion in fiscal year 2013.
The U.S. Postal Service, which receives no taxpayer money for its daily operations, but is subject to congressional control, is trying to find new ways to save itself from financial ruin. Santoli points out that “it’s not so much the day-to-day” costs that are dragging down the battered agency; it’s the congressionally-mandated health and pension plan costs. In addition, the USPS will need to spend up to $10 billion over the next four years to update its aging infrastructure, namely its truck fleet and equipment.
Last November, the Postal Service partnered with Amazon.com (AMZN) to ship Amazon packages on Sundays at regular rates. Also last November, the USPS announced it was working with Staples (SPLS) to open postal centers in 82 Staples locations.
The Postal Service did not indicate in which cities it would provide the fresh grocery service or which retailers it would partner with. The USPS has some experience in grocery deliveries. It’s already engaged in a 60-day trial with AmazonFresh in San Francisco.
Santoli says a lot of local delivery e-commerce models have run aground because “it is very expensive” to deliver to so many different addresses in a cost- and time-efficient way. Santoli says of the USPS plan, “Maybe this is sort of a mutual solution” for the cash-strapped agency and some retailers looking to cut costs. But, he says, “I don’t think it is going to make big money.”