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Retail Trends

USPS Still Rides Strong

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N imble is hardly the first word most people would think of when describing the U.S. Postal Service. Mail is delivered, to be sure, but post office closings, rising postage rates and staggering debt are not to be ignored. Postmaster General/CEO Patrick R. Donahoe said as much in a March 2012 appearance before a congressional committee, saying the USPS “business model is broken.”

Yet for all its woes, the postal service knows shipping, and sporting goods retailer Olympia Sports is convinced of its value to outbound shipping operations.

Based in Westbrook, Maine, Olympia has more than 200 stores throughout the Northeast and Mid-Atlantic. The chain’s Get It inventory locator program leverages the USPS to deliver products to customers quickly and easily, says Paul Fitzpatrick, Olympia director of operations and distribution. Since Get It was instituted in 2006, it has meant “a few percentage points” to bottom line revenue, he says.

Fitzpatrick characterizes Olympia’s relationship with the postal service as the “last leg to get orders for product not in stores to the home.” It helps that USPS delivers on Saturdays, he adds.

“If you walk in and you need a size 10 in a pair of shoes and we don’t have them in that store, we can go on the system and look and determine if they are available elsewhere,” Fitzpatrick says. “It may be in our distribution center or it may be in another store.”

He says it took some time to orient customers to the inventory locator program. “They purchase the item and walk out with nothing more than a receipt on the faith that they are going to receive it from us,” he says. Over time, though, the service has won kudos: “I couldn’t believe I walked into your store Thursday night, and I needed to get soccer cleats for my [child] for Saturday afternoon practice,” a customer testimonial reads, “and, lo and behold, the postal service delivered it Saturday morning.”

More responsive
P urchases are logged into the Olympia POS system via a label server platform from DYMO Endicia, a provider of shipping postage technology solutions. The server allows retailers to embed USPS postage labels into applications like POS and websites, and DYMO Endicia’s Label Server Application Programming Interface (API) automatically prints out postage labels based on weight and destination. This functionality eliminates the need for additional software or separate accounts for multiple locations to print shipping labels.

Once the postage is purchased, the server automatically notifies the USPS of the pickup location; packages are sent via first-class or Priority Mail to arrive within two or three days.

As Postmaster General Donahoe told Congress, the USPS is seeking to remake its business model to be more responsive to customers, like Olympia, that provide USPS with consistent business. Last month, Donahoe presented eBay with the USPS’ Partnership for Progress award at the annual National Postal Forum in Orlando for bringing postal service technology innovations, including automated label printing, to its customers.

A changing dynamic
O lympia representatives met with postal officials to set up its labeling system and address the chain’s shipping needs. Previously, Olympia would use a traditional shipper in a non-automated, time consuming and expensive process.

Automation through DYMO Endicia and the postal service is key, Fitzpatrick says, estimating that his distribution operation has saved 45 percent in shipping costs compared with its previous carrier.

Amine Khechfe, DYMO Endicia co-founder and general manager, says shipping strategies have evolved in recent years among retail operators largely because of the burgeoning influence of online processes. Since much of e-commerce shipping is business-to-consumer, the postal service is leveraging its dominant footprint and historic role of mail delivery by aggressively working with retailers like Olympia.

“You’re seeing the whole dynamic changing, and traditional retailers have to have an online presence whether they are selling online or selling inside the store,” Khechfe says. “It is really one big presence they have to look at. The shipping market has followed that and has been booming.”

While there is a false perception that USPS has been dwarfed in innovation by carriers like UPS, FedEx and DHL, Khechfe says those carriers remain largely business-to-business shippers of bulk and palletized goods to retail stores and businesses. “When you come to under five pounds going to a consumer, it is the postal service that goes to every door,” he says. “As such, you are seeing a very interesting dynamic that the postal service has become equal or better” than some traditional carriers.

Choice vs. time
V ivian Li, DYMO Endicia brand manager, says e-commerce through the retail establishment is emerging as a new industry norm because of the understanding among consumers that physical stores can hold only so much inventory (Olympia stores, for example, are generally 4,000 to 4,500 sq. ft.).

Li says consumers today are willing to balance “choice vs. time” in their shopping — having the opportunity to touch and feel merchandise in the store, but amenable to waiting a day or two to have items shipped to get precisely what they want.

“There’s a feeling that you go to a retail store and you will be able to get something right away,” Li says, “But a retail store can only hold so much inventory. That’s where e-commerce comes in. It’s the World Wide Web — everything is out there. The idea that you can access a retail store and get all the inventory that they have on hand at all of their distribution centers is a very compelling story.”

The postal service’s embrace of innovation has provided Olympia with a critical solution by delivering to its customers efficiently.

“The customer probably doesn’t care where it is being shipped from as long as they get it in a timely fashion and get what they are looking for,” Fitzpatrick says. “The postal service has been a very good fit for us to take care of that piece of the business.”