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Policy: Budgets & Deficits

Amazon introduces deliveries on Sundays with US Postal Service

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Economy,Budgets and Deficits,Postal Service,Bloomberg News

Amazon.com Inc. and the U.S. Postal Service are teaming up to offer Sunday delivery, as the world’s biggest online retailer seeks to broaden its reach by getting packages to customers on any day of the week.

Customers in New York and Los Angeles can start choosing Sunday delivery at no extra cost from this week. The service will expand to Dallas, Houston, Phoenix, New Orleans and other cities next year, Amazon said in a statement today.

While Amazon is seeking to siphon away customers from Target Corp. and other retailers, it’s also facing competition from online-shopping sites that are rolling out new services to get products to customers more quickly and efficiently. EBay Inc. offers deliveries under an hour, seven days a week, for some products, and Wal-Mart Stores Inc. operates a same-day delivery service for groceries and household goods.

“What really drives the company — it’s all about selection growth, lower costs and increased speed,” Dave Clark, Amazon’s vice president of worldwide operations and customer service, said in an interview. “Thousands of people around the world spend every day working on those three things in operations, and a big piece of speed for us is adding seven-day delivery.”

Amazon won’t change shipping prices for customers, adding to fulfillment costs that made up the largest portion of the company’s expenses in the third quarter. Investors have endorsed the investment in capacity — spending increased 35 percent to $2.03 billion — pushing up the company’s shares 40 percent so far this year even as the Seattle-based retailer posts losses.

Web Store

The Web retailer’s partnership with the postal service means faster delivery for Internet shoppers, especially Amazon Prime members who pay $79 a year for unlimited two-day shipping — a promise the company previously couldn’t fulfill if someone ordered a product on Friday afternoon. For the postal service, the alliance means more packages flowing through its network, which generates more revenue than flat mail.

Sunday delivery is part of Amazon’s strategy to keep shoppers coming back to buy products on its Web store. The company had 89 warehouses in 2012 and is planning 7 more this year. Amazon also unveiled plans in July to increase staff by 5,000 in 17 centers this year, and is hiring 70,000 seasonal workers in the U.S. to meet holiday order demand.

By investing in fulfillment centers — massive warehouses that store and package everything from books to garden furniture — Amazon has improved its ability to sort packages so that they reach shoppers more quickly and efficiently. That could help the U.S. Postal Service as it increases its breadth of services, Clark said.

Amazon’s Sunday delivery service is being introduced just before the year-end holiday shopping season, when the postal service predicts that 15 billion pieces of mail will be delivered.

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