Postal Service Approved to Deliver San Francisco's Groceries

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When you wake up with groceries on your doorstep, don't thank the milkman – thank the Postal Service.

The Postal Regulatory Commission approved a plan on Thursday for the Postal Service to deliver groceries between 3 a.m. and 7 a.m. The two-year market test of what it calls "Customized Delivery" is currently restricted to San Francisco, but may someday expand into a national program.

The Postal Service has been testing grocery delivery since August with Amazon's same-day and early morning grocery service, AmazonFresh. During the operational test, the Postal Service processed an average of 160 deliveries per day in 38 zip codes.

Related: Taking Aim at Costco and Walmart, Amazon Launches Prime Pantry

The two-year market test is designed to help bring the Postal Service's grocery delivery services to other major cities around the U.S. and to test other possible delivery windows. Currently, the Postal Service only makes these deliveries when mail trucks would not otherwise be in use, resulting in middle of the night and early morning drop-offs.  

The regulatory commission capped annual revenue for the program at $10 million, saying that there was not yet enough financial data to estimate revenues.

If Amazon and the Postal Service can team up to expand the test to other cities, it could be a major victory for both parties. Recently, the Postal Service has been working to update the organization's image and services, including launching lower rates for customers who ship at least 50,000 parcels a year to attract big ecommerce companies. Meanwhile, Amazon is scrambling to keep ahead of ecommerce competitors, with Google expanding its same-day delivery service.

Related: 3 Ways to Be More Savvy About Free Shipping

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