The Office of Inspector General at the U.S. Postal Service has concluded that the USPS is not threatened by the rise of same-day delivery, determining it is a niche, costly model appealing mostly to urban millennials that only represented 2% of all parcel deliveries in 2018.
The IG report also recommended the USPS continue to focus on next-day delivery through products like Parcel Select. The DDU induction service is utilized by UPS and FedEx for last-mile delivery, although both major carriers have been diverting volume to their own networks.
“If same-day delivery grows at or above the current rapid pace (up to 50% annually), it could disrupt last-mile delivery as we know it,” the IG report stated. “This could have tremendous implications for the U.S. Postal Service and other traditional carriers. Yet, same-day delivery’s current volumes do not appear to be a significant threat to the Postal Service’s own parcels volume at this time.”
In the report, the IG concluded that same-day delivery has limited appeal. “Beyond
a core of enthused urban Millennials, many consumers are unwilling to pay for same-day delivery at any price,” the report stated. “If they are interested at all, it is mostly for urgent needs like medications or groceries. The business model used by some major same-day delivery providers may be unsustainable because it loses money with each delivery.”