Canada Post partners with retailers for same-day delivery

Forget calling it snail mail: Canada Post announced Tuesday it is launching a same-day service for online shoppers called Delivered Tonight.

A partnership with Wal-Mart Canada Corp., Best Buy Canada Ltd., and Indigo Books & Music Inc., the pilot project means people can order everything from a new smartphone to baby supplies by mid-day and have their new item in hand that evening.

Delivered Tonight currently serves about four million people in the Greater Toronto Area, but if successful, it could be established in other cities across Canada. It’s a potential game-changer for Canada Post, whose core postal service lost $104-million in the second quarter.

“When we look at what Canadian online shoppers are saying, they’re saying ‘we want more choice over when and where we get items," says Rod Hart, general manager of domestic parcels and e-commerce market development at Canada Post.

“A lot of people are doing same-day service in other parts of the world ... We are Canada’s leading delivery company for online purchases, so we thought, ‘Why don’t we make the jump? What if we did same day where you could order something in the morning or over your lunch hour and have it delivered in the evening, say somewhere in the 5:30p.m. to 9 p.m. range?’”

Ten to 15 per cent of Canadian online shoppers say they want same-day delivery and are willing to pay extra for it, according to a survey of 4,000 consumers that Canada Post commissioned last year. The move makes sense, given that Canada Post has resources such as trucks and depots that aren’t fully utilized later in the day and in the evening.

The Crown corporation needs all the help it can get. According to a Conference Board report released earlier this year, how falling mail volumes will result in a $1-billion a year loss for 2020.

The report, which was commissioned by Canada Post, found that almost half of all Canadian households send a maximum of two pieces of mail per month. The amount of letter mail in 2012 plummeted by one billion compared to 2006.

“There’ no question that Canada Post’s future is not going to be reliant on growth in the mail,” Hart says. “We know we’ve got some issues that we need to solve around the decline of mail. But one thing’s for certain: parcel [distribution] is growing and it’s growing tremendously. We know that’s going to be a growth engine for us. It doesn’t change the need for us to the transform the delivery operations to deal with the declines in mail. What we’re trying to do is focus on areas we have strengths in and areas where we know we’re going to grow, and parcels is that.”

The pilot project, which will continue through the Christmas shopping season, aims to help retailers and Canada Post adapt to the needs and expectations of Canada’s rapidly evolving e-commerce market. It will also help the crown corporation better understand and plan for the inevitable challenges of delivering products through rush-hour traffic within hours of it being ordered online.

Canada Post will charge retailers an undisclosed amount for the service, and it’s up to retailers to decide how much they will charge consumers, if at all.

Approximately 70 per cent of the 100,000 products Wal-Mart sells online will be eligible for same-day delivery, provided they meet parcel weight and size limits.

Best Buy, which owns the Future Shop chain, said that laptops, tablet computers, and printers will likely be the most popular items purchased for same-day delivery. The electronics outlet will charge $13.95 for the service.

In 2010, Canadians placed nearly 114 million orders while shopping online, averaging about 10 orders per person, according to Statistics Canada. Orders totalled $15.3 billion, with an average value of $1,362 per person per year. Most shoppers (83 per cent) placed orders from companies in Canada.

Of those who did not place an order, 32 per cent said that the main reason was that they had no interest, while 26 per cent preferred to shop in person and almost 19 per cent cited security concerns.