OIG Spotlight – RARC-IB-15-001 – 03/02/2015
Groceries are still a relatively small segment of the larger e-commerce business, but there are some indicators that it might become a bigger and more competitive market in the near future as people grow more comfortable with purchasing food items online. The Postal Service’s extensive fleet, last‑mile service to every household, and reputation for reliability may set the stage for it to become a viable player in this market.
To gain additional insights on opportunities in the grocery delivery market, we examined the service offerings of a variety of providers and foreign posts. Although providers are still experimenting with different business models, two main strategic options seem to emerge.
■ Establish partnerships to offer last-mile service to national and regional grocers that have not entered online shopping, as well as small e-stores, local producers, and the fast-growing number of food subscription services.
■ Develop an online platform and offer more services in related areas, which may include an online shopping mall directly connecting consumers and producers or local farmers, payments processing, warehousing, picking, and packaging.
If the Postal Service decides to explore any of these opportunities, it is essential to enter the market soon before more players crowd this space and make entry more difficult. Critical to the Postal Service’s success in this market will be its ability to provide a level of service in line with customer expectations, industry standards, and technological advances.