Amazon.com unveiled a new partnership with the U.S. Postal Service to deliver online orders from the world's largest Internet retailer on Sunday for the first time.
The service started this weekend in the Los Angeles and New York metropolitan areas and Amazon plans to expand it to a large portion of the U.S. population in 2014, including Dallas, Houston, New Orleans and Phoenix.
Amazon is not charging extra for the new service, so members of the company's popular Prime service will be able to buy products on Friday and get them by Sunday for free. The service also applies to non-Prime members, who can get free five to eight-day shipping on orders of at least $35 (up from $25 previously).
Amazon has been spending billions of dollars building new warehouses around the world so it can deliver products more quickly. The company hopes that adding Sunday as a delivery option will generate more sales.
"The three big pieces of growth for us are selection, lower prices and speed," said Dave Clark, vice president of worldwide operations and customer service. "Adding an additional day is all about delivery speed. An Amazon customer can order a backpack and a Kindle for their child and be packing it up on Sunday for school on Monday."
The deal is also a welcome new source of revenue for the financially struggling U.S. Postal Service, which has been trying tap into the growth of online shopping.
A package waits to be sorted for shipment at the Friendship Station post office in Washington, DC Monday, December 15, 2003. The 20016 zip code post office is traditionally one of the busiest in the DC area. December 15 is statistically one of the busiest days for package drop off at the USPS. (Photo by Brendan Smialowski/Getty Images) ORIG FILE ID: 2812698(Photo: Brendan Smialowski Getty Images)
"It will certainly help. The fastest growing segment is the package business," Postmaster General Patrick Donahoe said. "The future of package delivery is a seven-day-a-week schedule. We've got the capacity to do it."
The postal service expects to deliver 420 million packages this holiday season, a 12% increase over last year, but it is in a precarious financial condition. The organization lost $15.9 billion in its last fiscal year and expects a loss of $6 billion this year.
In September, the postal service said it would seek to raise the price of a First-Class stamp from 46 cents to 49 cents. That price hike, which would kick in Jan. 26, and increases for postcards and international mail would generate $2 billion in revenue, it said.
Amazon is increasingly delivering its own packages, through new services such as AmazonFresh, its online grocery business. The company will also start delivering packages itself in some parts of London in coming weeks, Clark said.
However, the company still needs carriers such as USPS, United Parcel Service and FedEx to help it cover the so-called last mile to most people's doorsteps. And the USPS is the only delivery service that reaches every address in the nation – 152 million homes, businesses and post office boxes.
"We are leveraging our technology and infrastructure to get packages to USPS so they can create an incremental day of package delivery," Clark said. "This helps them and it helps our service too."