September 4, 2014, 4:30 PM

Amazon’s groceries are in the mail

The U.S. Postal Service is delivering fresh food in San Francisco in a test with Amazon.com.

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The U.S. Postal Service is delivering meat, vegetables and other groceries ordered via Amazon.com Inc. to consumers in the San Francisco area in a test that could produce a larger harvest of e-commerce deliveries for the federal agency

The test began the first week of August and was designed to run for 60 days, says a Postal Service spokeswoman. The agency will deliver orders to members of the AmazonFresh online grocery service between 3 a.m. and 7 a.m., when postal trucks typically would be idle. Perishable food comes in insulated bags, eliminating the need for refrigerated transport.

The postal spokeswoman says the test will “determine if delivering groceries to residential and business addresses would be feasible from an operations standpoint and could be financially beneficial.” 

Amazon, No. 1 in the Internet Retailer Top 500 Guide, kept mostly mum today about the test, with its spokeswoman offering only this: “We are always looking for new and innovative ways to deliver packages to customers.”

The grocery delivery test in San Francisco represents the latest fruit of a fledgling relationship between the federal agency and the leading online retailer. In November, the web-only merchant launched its Sunday delivery service to the top two metro areas in the United States by population, New York and Los Angeles. Amazon negotiated a contract with the U.S. Postal Service for those deliveries. The service is for packages that weigh up to 70 pounds.

The program has since sprouted up in Waco, TX, Columbus, OH, and 13 other cities. “We were already working closely with Amazon—it been a good relationship—and conducting this test is expanding on that existing relationship,” says the postal spokeswoman.

According to a recent issue of Internet Retailer magazine, U.S. consumers spent more than $650 billion on groceries at food and beverage stores last year. That makes grocery the third-largest category for retail spending after automotive sales and general merchandise store sales, the U.S. Commerce Department says. But food is one retail product category that consumers still mostly buy from physical stores—the largest North American e-retailers that predominately sell food products only capture 0.5% of total grocery sales, about $3.67 billion, according to an analysis of data on Internet Retailer's Top500Guide.com.

AmazonFresh debuted in 2007 with tests in Seattle and has since expanded to northern and southern California. Consumers buying more than $35 per order receive free delivery, though AmazonFresh members must pay $299 annually to receive grocery deliveries unless they sign up for free trials. Without that membership, orders of more than $100 receive free delivery, with other orders generally costing between $7.99 and $9.99.

The Amazon grocery test is hardly the only meaty news concerning e-commerce delivery competition this week. United Parcel Service of North America Inc., the leading shipping service for top online retailers in North America, said it will introduce a service that will allow consumers to pick up their online orders from lockers in retail locations. The program follows in the lead of similar efforts by Amazon and Wal-Mart Stores Inc., and would milk the apparent consumer demand for picking up web orders outside homes—a comScore Inc. study says that 26% of U.S. online shoppers want to receive deliveries somewhere other than their home.

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