1. What’s USPS Bringing to the B2C Market? Jesus Barona Mgr., Business Alliances U.S. Postal Service April 2013 USPS Parcels “Navigating the Options”

2. Topics  eCommerce trends  What are my options?  Lightweight  Expedited  Ground  Returns done right  How to engage USPS  Conclusion - Why USPS?

3. Market forecast Online retail spending to increase 62% within three years By 2016, U.S. consumers will be spending $327B online each year Forrester Research eCommerce

4. Shipping trends US Retail e-Commerce Sales, 2010 – 2016 ($B, % ch.) Businesses are selling more products online and shipping them to the home ! comScore eCommerce

5. eCommerce goods being shipped Digital content Consumer electronics Flowers, greetings & misc. Computers & peripherals Apparel & accessories Event tickets Consumer packaged goods Jewelry & watches Home & garden Books & magazines Sport & fitness Office supplies Video games & accessories Furniture & appliances VERY STRONG GROWTH 15% or higher STRONG GROWTH 10–14% eCommerce

6. Shipping challenges for e-tailers Consumer expectations Free shipping — the new ‘normal ’ Mobile access Returns Delivery choices eCommerce

7. E-commerce Shopper Needs eCommerce

8. 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 sales 2.4B pieces eCommerce

9. 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 point SERVING E-tailers who want to offer free shipping Any lightweight fulfillment What are my options?

10. 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 Extras 2-3 day delivery Included in price: –Pick up –Tracking –Forwarding/return –Delivery confirmation What are my options?

11. 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 Benefits Save costs – no weighing, rating If it fits it ships – up to 70 lbs Free branded packaging delivered What are my options?

12. 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 Benefits Save costs – no weighing, rating If it fits it ships – up to 70 lbs Free branded packaging delivered What are my options?

13. 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?

14. 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 returned each 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

15. Returns and eCommerce Approaching $4B by 2016 Consumer Returns

16. 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

17. 85% of customers WILL NOT shop again if the return process is not convenient 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

18. 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 SERVING USPS Return Options

19. * 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 POSAPCCNS Priority Mail First Class Package Parcel Post Returns — options (C2B) USPS Return Options

20. How to engage USPS  Atlanta Field Sales:  Michael Malone Mgr., Shipping & Mailing Solutions Atlanta District – U.S. Postal Service Office: 770-935-2216 Mobile 770-861-0439 email: michael.w.malone@usps.govmichael.w.malone@usps.gov  Business Alliances:  Jesus Barona Mgr., Business Alliances U.S. Postal Service Office: 404-585-8331 email: jesus.j.barona@usps.govjesus.j.barona@usps.gov

21. Why USPS? B2C fulfillment priced right—ground, expedited, flat-rate, lightweight, cubic and regional choices Best Consumer returns solution in the market Free packaging, pickup and tracking Visibility for mailing and shipping Convenience—more locations, mobile access Secure mailbox and convenient delivery options (GoPost, Hold For Pickup) Upfront costs – NO hidden surcharges/fees Conclusion

22. Thank you!