Holiday e-commerce deals may deliver surge in U.S. Postal Service revenue

Reuters

By Elvina Nawaguna

WASHINGTON, Nov 13 (Reuters) - The U.S. Postal Service,bleeding millions of dollars daily, is hoping the 2013 holidayseason will boost its finances through a partnership withAmazon.com, a surge in online shopping and the timelyrelease of a new stamp featuring a whimsical Yule gingerbreadhouse.

The holiday shopping and card- and gift-sending seasonusually is a busy time for the USPS, which expects a 12 percentjump in package volumes to 420 million this year from lastyear's holiday season, it said.

The service is struggling financially as mail volumes tumblebecause more Americans now communicate and pay bills online, andas massive payments into its future retirees' healthcare fundmandated by Congress take a toll.

Yet the potentially lucrative deal with online shoppinggiant Amazon to deliver packages on Sundays positions USPS tocompete more favorably in the $186-billion annual e-commercemarket. Retail sites must use ground delivery services to getpurchases to their destination.

Parcel delivery is "the part of the business that the PostalService needs to rely on to become sustainable," said RickGeddes of Cornell University who has written about USPS.

The National Retail Federation expects holiday online salesin November and December to increase by about 15 percent fromthose months last year, to approximately $82 billion.

Amazon's arrangement with USPS applies only to deliveries inselect large cities including San Francisco and New York, whichwill help it in those cities versus its main competitors, FedExCorp and United Parcel Service Inc, that offerno Sunday delivery.

USPS has focused on package delivery as a key growth area.In its third quarter that ended June 30, revenue from deliveriesgrew 22.6 percent from the previous year.

While this holiday's e-commerce alone is unlikely tosignificantly improve USPS's long-term finances, partnershipswith companies like Amazon and an arrangement to sell itsservices out of Staples Inc stores will make it morecompetitive, said Geddes.

The agency also expects to lure more customers with new freepackage insurance and free tracking on priority mail, featuresit introduced in August, and hopes the gingerbread house stampwill encourage more people to send greeting cards.

The carrier lost nearly $16 billion last year and is seekinglegislative relief to allow it to manage its own healthcaresystem and to find more innovative revenue sources.

Without legislative flexibility to run its own affairs,innovate and raise revenue, Postmaster General Patrick Donahoehas said the agency could require a taxpayer bailout of nearly$50 billion by 2017.

A Postal Service spokeswoman said details about revenue andpackage volume expectations from the Amazon partnership areconfidential.

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