What’s USPS Bringingto the B2C Market?

Jesus BaronaMgr., Business Alliances

U.S. Postal Service

April 2013

USPS Parcels“Navigating the Options”

USPS Parcels“Navigating the Options”

Topics

eCommerce trends What are my options?

Lightweight Expedited Ground

Returns done right How to engage USPS Conclusion - Why USPS?

Market forecast

Online retail spending to increase 62% within three years

By 2016, U.S. consumers will be spending $327B online each year

Forrester ResearchForrester Research

eCommerce

Shipping trendsUS Retail e-Commerce Sales, 2010 – 2016 ($B, % ch.)

Businesses are selling more products online and shipping them to the home!Businesses are selling more products online and shipping them to the home!

comScorecomScore

eCommerce

eCommerce goods being shipped

Digital contentConsumer electronicsFlowers, greetings & misc.Computers & peripheralsApparel & accessoriesEvent tickets

Consumer packaged goods Jewelry & watches Home & garden Books & magazines Sport & fitness Office supplies Video games & accessories Furniture & appliances

VERY STRONG GROWTH15% or higher

VERY STRONG GROWTH15% or higher

STRONG GROWTH10–14%

STRONG GROWTH10–14%

eCommerce

Shipping challenges for e-tailers

Consumer expectations

Consumer expectations

Free shipping — the new ‘normal’Free shipping —

the new ‘normal’

Mobile accessMobile access

ReturnsReturns

Delivery choicesDelivery choices

eCommerce

E-commerce Shopper Needs

eCommerce

eCommerce shipping market

USPS share growing USPS core strengths

Every house / every day Pickup and delivery Outbound & returns

Lightweight advantage Consumer access NO hidden surcharges/fees

eCommerce$202B annual

retail sales2.4B pieces

eCommerce

Lightweight Shipments – (under 1 lb.)

First-Class Package Service Pricing Options

Commercial Base - up to 13 oz. Commercial Plus - up to 1 lb.

Service standard 1-3 days

Parcel Select Lightweight High volume; up to 1 lb. Priced by weight, presort level

and entry pointSERVINGSERVING

• E-tailers who want to offer free shipping• Any lightweight fulfillment

• E-tailers who want to offer free shipping• Any lightweight fulfillment

What are my options?

Expedited weight/zone

Priority Mail Weight/Zone Self-packaging or branded packaging choices Envelopes, boxes, padded, soft-pack Available with cubic pricing

Priority Mail Cubic Space-efficient shipping up to 0.5 cubic feet Postage based on distance and

cubic volume - not weight Commercial customers Threshold 150,000 annually Soft-pack and padded options

Expedited ExtrasExpedited Extras

• 2-3 day delivery• Included in price:

– Pick up– Tracking– Forwarding/return– Delivery confirmation

• 2-3 day delivery• Included in price:

– Pick up– Tracking– Forwarding/return– Delivery confirmation

What are my options?

Expedited Flat Rate Priority Mail Flat Rate

Six envelopes and six boxes to choose from 2-3 day delivery 75,000 combined parcels/flats for Commercial Plus Padded envelope fulfillment option – cushioned ride

Priority Mail Regional Rate Best selling shipping boxes High-volume, short-haul market Highly competitive Zones 1-4 Three sizes, five boxes total Box C — largest USPS-produced

box for commercial use

Flat Rate BenefitsFlat Rate Benefits

• Save costs – no weighing, rating• If it fits it ships – up to 70 lbs • Free branded packaging delivered

• Save costs – no weighing, rating• If it fits it ships – up to 70 lbs • Free branded packaging delivered

What are my options?

Expedited Flat Rate (cont’d) Express Mail Flat Rate

Overnight guaranteed Commercial Plus 5,000 pcs/yr. PC Postage, IBI meter, permit imprint or ePostage Three envelopes including new padded; new Flat Rate Box

Critical Mail 1-3 day delivery Letters to 3 oz. - Flats to 13 oz. Event tickets, documents Secure delivery on first attempt Threshold 5,000 annually

Flat Rate BenefitsFlat Rate Benefits

• Save costs – no weighing, rating• If it fits it ships – up to 70 lbs • Free branded packaging delivered

• Save costs – no weighing, rating• If it fits it ships – up to 70 lbs • Free branded packaging delivered

What are my options?

Ground shipments – (1-70 lbs.) Full Network

Parcel Post – no longer available New Options:

Standard Post – Retail Parcel Select nonpresort – Commercial

Parcel Select End to End 1st mile - last mile Workshare discounts - six entry levels National and Regional third-party logistics providers/partners

What are my options?

Returns and Online Purchasing

5% to 30% of sales end up as a return Average 8.5% High tech returns up to 20% Apparel > 30%

$100 billion in goods returnedeach year

Nearly half following holiday season Can be costly to merchant

2-3 times cost of outbound shipment If poorly handled, erodes profits Impact on repeat orders, customer loyalty

Consumer Returns

Returns and eCommerceApproaching $4B by 2016Approaching $4B by 2016

Consumer Returns

Consumer returns (C2B shipping)

Fast growing Primarily ground

Less time-sensitive than outbound

Huge business impact Consumers seek convenient,

low- or no-cost Merchant returns policy

influences purchase decision,customer retention online

Consumer Returns

85% of

customers WILL

NOT shop again

if the return

process is not

convenient

0%

0%

0%

1%

1%

1%

1%

95% of

customers WILL

shop again if

the return

process is

convenient

Impact of a negative returns experience

Impact of a positive returns experience

With a positive returns experience―customer returns to shop again Repeat purchases by existing customers require up to 90% less marketing

effort than new purchases

Returns—business impact

Consumer Returns

USPS Returns

Merchant-paid and ROYO options Consumer and merchant convenience

Cloud-based labels Scan-based payment Package pickup,

tracking Data exchange

(inventory,customer relations)

• Top Internet retailers•Existing partners•Businesses looking for ROYO solutions

• Top Internet retailers•Existing partners•Businesses looking for ROYO solutions

SERVINGSERVING

USPS Return Options

* In some cases, consumers elect not to use the convenience label and choose ROYO instead

Two main categories ROYO followed by significant number of merchants

First Mile (PRS)

Convenience Labels*

Merchant pays shipper

59% of merchants

Permit

End-to-End(MRS, PRS, SBP)

ROYO

Consumer pays shipper

41% of merchants

POS APC CNS

Priority Mail

First Class Package

Parcel Post

Returns — options (C2B)

USPS Return Options

How to engage USPS

Atlanta Field Sales: Michael Malone

Mgr., Shipping & Mailing SolutionsAtlanta District – U.S. Postal ServiceOffice: 770-935-2216Mobile 770-861-0439email: michael.w.malone@usps.gov

Business Alliances: Jesus Barona

Mgr., Business AlliancesU.S. Postal Service

Office: 404-585-8331 email: jesus.j.barona@usps.gov

Why USPS?B2C fulfillment priced right—ground,

expedited, flat-rate, lightweight, cubicand regional choices

Best Consumer returns solution in the marketFree packaging, pickup and trackingVisibility for mailing and shippingConvenience—more locations, mobile accessSecure mailbox and convenient delivery options

(GoPost, Hold For Pickup) Upfront costs – NO hidden surcharges/fees

Conclusion

Thank you!