In its second-largest acquisition, Amazon buys the company for $970 million.
It kicks off the service in New York and Los Angeles.
In a so-far exclusive deal with the United States Postal Service, Amazon.com Inc. yesterday kicked off a Sunday delivery service starting in New York and Los Angeles. “We’re excited that now every day is an Amazon delivery day,” says Dave Clark, Amazon’s vice president of worldwide operations and customer service.
Amazon, No. 1 in the Internet Retailer Top 500, plans to roll out the service to “a large portion of the U.S. population” next year, including Dallas, Houston, New Orleans and Phoenix. It did not mention other metropolitan areas. Amazon is providing Sunday delivery for no extra charge to members of Amazon Prime, which provides customers free two-day shipping for a single annual fee of $79. For other shoppers, Amazon is charging its customers standard shipping rates for Sunday delivery, a spokeswoman says.
Amazon is the only retailer to have negotiated a contract with the USPS to provide Sunday delivery, a USPS spokeswoman says. “If other retailers want similar service, we would be happy to talk to them,” she adds. The service is for packages of up to 70 pounds.
“As online shopping continues to increase exponentially, the Postal Service is very pleased to be able to offer shipping solutions that allow major mailers and customers alike to appreciate the benefits of using the U.S. Mail,” Postmaster General Patrick R. Donahoe says.
Amazon will deliver packages to local post office facilities “early” on Sunday mornings for local delivery by the USPS the same day, the USPS spokeswoman says, declining to be more specific.
Outside of contracted Sunday delivery services, the USPS will deliver some packages on Sundays during the peak December shopping season just to clear its shipping volume and ensure that packages get delivered, the spokeswoman says. But retailers cannot choose to schedule Sunday deliveries, she adds.
Analysts at research and advisory firm RSR Research LLC say they’re unaware of other online retailers, outside of some online grocers, that are offering Sunday delivery. “But it’s an excellent idea and I would expect if the price is competitive—and maybe even if it’s not—we’ll see other retailers following suit,” says RSR managing partner Paula Rosenblum. “At this point, Amazon is leading the way in shipping and fulfillment needs.”
The onset of scheduled Sunday delivery of e-commerce orders is particularly good news for the USPS, Rosenblum adds, as it seeks new revenue to offset a multibillion-dollar budget shortfall amid a drop in letter volume. “It’s a nice niche for them,” she says, adding that the Postal Service can be a good business associate for online retailers looking to grow shipping services and revenue. “It’s very entrepreneurial of them.”
E-commerce package deliveries have been a bright spot in recent years for the USPS. In its most recent available figures, the agency notes that online package deliveries rose 7.5% year over year for the year ended Sept. 30, 2012, while overall mail volume declined 5%. When it proposed earlier this year to end Saturday deliveries of general mail, it said it would continue to deliver packages on Saturdays. (The proposed termination of Saturday general-mail delivery, though still noted on USPS.com, has not been approved by the U.S. Congress.)
UPS and FedEx Corp., which are major competitors to USPS for e-commerce clients, have not announced plans to also offer online retailers Sunday delivery as part of standard shipping services. Although FedEx doesn't offer Sunday delivery as part of overall scheduled services, it does offer it as part on same-day delivery services on Sundays within major metropolitan areas, a spokeswoman says. UPS did not immediately return a request for comment.