The U.S. Postal Service (USPS) will suspend a pilot program of a same-day delivery service in San Francisco due to lack of interest.
The one-year pilot, called "Metropost," will be suspended March 1, USPS said. It was rolled out in December 2012 to test demand for same-day deliveries in a 49 square-mile radius in and around the city. However, only 95 packages a day were sent by the six participating retailers over a five-month period, well short of the required daily minimum target of 200 packages, the USPS' Inspector General's (IG) office said in a statement last week.
The program's success hinged greatly on the involvement of large retailers. However, only one large retailer agreed to participate in the pilot, and that company later withdrew prior to implementation due to what the IG's office called "other operational priorities." As a result, USPS was left with small local firms that could not supply the volumes needed to sustain the program, the IG said.
The IG office did not identify the large retailer. DC Velocity reported in late 2012 that florist and gift-shop giant 1-800-FLOWERS.com had agreed to be the launch customer.
Postal officials said they plan to relaunch the program when they can get large retailers involved. A similar initiative is continuing in New York where large retailers are participating, the IG said.
All told, USPS spent $10,288 on the San Francisco pilot, and earned $760, resulting in a net loss of $9,528.
The IG's office said that USPS "did not properly implement the pilot." Toni G. Delancey, a USPS spokeswoman, said that the "implementation wasn't faulty. It was just that the volume was too low."
The program was launched with several limitations. Annual revenue during the test phase could not exceed $50 million. No more than 10 online e-commerce companies could participate. Each participant must have had at least 10 physical locations of some type nationwide, with one or more in the San Francisco area.
Customers placed orders by 2 p.m. and received them between 4 p.m. and 8 p.m. USPS developed a separate delivery network dedicated to the implementation.
San Francisco was chosen as the test market because of its dense population and a customer base that would be receptive to a same-day delivery service, USPS said at the time the service was announced.
USPS was to develop one pricing scheme for packages weighing less than 25 pounds and another for packages weighing between 26 and 150 pounds. The retailer would determine how it would pass on its shipping costs to the end customer.