81 FR 15760 - Market Test of Experimental Product-Customized Delivery

POSTAL REGULATORY COMMISSION

Federal Register Volume 81, Issue 57 (March 24, 2016)

The Commission is noticing a recently-filed Postal Service proposal to conduct a market test of an experimental product called Global eCommerce Marketplace (GeM) Merchant. This notice informs the public of the filing, invites public comment, and takes other administrative steps.

[Federal Register Volume 81, Number 57 (Thursday, March 24, 2016)]
[Notices]
[Pages 15760-15761]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-06616]


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POSTAL REGULATORY COMMISSION

[Docket No. MT2016-1; Order No. 3162]


Market Test of Experimental Product-Customized Delivery

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
proposal to conduct a market test of an experimental product called 
Global eCommerce Marketplace (GeM) Merchant. This notice informs the 
public of the filing, invites public comment, and takes other 
administrative steps.

DATES: Comments are due: April 11, 2016.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Those who cannot submit comments 
electronically should contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section by telephone for advice on filing 
alternatives.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
II. Background
III. Contents of Filing
IV. Notice of Commission Action
V. Ordering Paragraphs

I. Introduction

    In accordance with 39 U.S.C. 3641 and 39 CFR 3035.3, the Postal 
Service filed notice of its intent to conduct a market test of an 
experimental product called Global eCommerce Marketplace (GeM) 
Merchant.\1\ GeM Merchant would allow domestic online merchants to 
offer their international customers the ability, at the time of 
purchase, to prepay the estimated duties and taxes that the foreign 
country's customs agency will assess upon the shipment's arrival in the 
foreign destination. Notice at 2.
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    \1\ Notice of the United States Postal Service of Market Test of 
Experimental Product--Global eCommerce Marketplace (GeM) Merchant 
Solution and Notice of Filing GeM Merchant Model Contract and 
Application for Non-Public Treatment of Materials Filed Under Seal, 
March 16, 2016 (Notice).
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II. Background

    According to the Postal Service, GeM Merchant constitutes a novel 
eCommerce service for domestic online merchants and their international 
customers. Id. The Postal Service explains that at the time of 
purchase, GeM Merchant would allow international customers of domestic 
online merchants to prepay estimated duties and taxes. Id. The Postal 
Service describes that the domestic merchant will receive the order and 
will prepare the item for domestic shipment to the GeM processing 
facility. Id. After the item arrives at the GeM processing facility, 
the Postal Service indicates that it or its supplier will inspect the 
item for verification and security, as well as prepare and arrange for 
the item's international shipment and delivery to the overseas address. 
Id.

A. Nature and Scope of the Proposed GeM Merchant Market Test

    The Postal Service intends to offer GeM Merchant to a limited 
number of domestic online merchants through negotiated service 
agreements (NSAs) that would include, but not be limited to, 
localization, export compliance, delivery speed, and targeted marketing 
features. Id. Through the market test, the Postal Service plans to 
assess GeM Merchant's revenue potential, competitive price points, and 
potential for expansion. Id.
    The Postal Service asserts that the proposed GeM Merchant market 
test would likely benefit the public by meeting the demands of domestic 
online merchants and their international customers. Id. at 7. The 
Postal Service anticipates that the GeM Merchant product would 
contribute to the Postal Service's financial stability by generating 
more outbound international package delivery opportunities. Id. at 7-8.
1. Duration
    The Postal Service plans to begin the market test on or shortly 
after April 30, 2016, to run for 2 calendar years. Id. at 6. After 
determining the actual start date, the Postal Service intends to file a 
notice with the Commission providing the definite start date. Id. at 6 
n.4. During the 2-year market test period, the Postal Service intends 
to offer NSAs with standard 1-year terms to domestic online merchants. 
Id. at 6. The Postal Service requests that the Notice serve as an 
application for extension under 39 U.S.C. 3641(d) for any NSAs that 
have terms that extend beyond the 2-year period of the market test. Id. 
The Postal Service represents the extension would be limited to 
satisfying existing contractual obligations and that it would not 
initiate any new agreements with merchants after the 2-year period of 
the market test. Id. at 6-7. If the market test is successful, the 
Postal Service states that it would seek permanent product status for 
GeM Merchant. Id. at 7.
2. Geographic Markets
    According to the Postal Service, because GeM Merchant is an 
international product offered to select domestic merchants through NSAs 
rather than a retail service offered to the American public, the 
geographical scope analysis under 39 CFR 3035.3(a)(2)(iv) is not 
germane to this market test. Id. The Postal Service represents that it 
intends to offer GeM Merchant using two processing locations and to 
execute contracts with few merchants, i.e., less than 1 percent of the 
overall domestic merchant target segment. Id.
3. Revenues
    The Postal Service does not request a waiver of the $10 million, as 
adjusted for inflation, annual revenue limitation at this time. Id.; 
see 39 U.S.C. 3641(e). If market test revenues approach the cap, the 
Postal Service states that it will submit an application for exemption 
from the $10 million limitation under 39 U.S.C. 3641(e)(2) and 39 CFR 
3035.16. Notice at 7.
4. Data Collection Plan
    The Postal Service proposes to report the costs, revenues, and 
volumes associated with each agreement on a

[[Page 15761]]

quarterly basis. Id. at 8; see 39 CFR 3035.20.
5. Statutory Authority
    The Postal Service asserts that the proposed GeM Merchant market 
test satisfies the conditions on market tests of experimental products. 
Notice at 3; see 39 U.S.C. 3641(b). The Postal Service submits that GeM 
Merchant is significantly different from all products offered within 
the past 2 years. Notice at 3; see 39 U.S.C. 3641(b)(1). The Postal 
Service states that GeM Merchant would offer a new feature: the ability 
for a consumer to prepay estimated foreign duties and taxes at the time 
of purchase. Notice at 4.
    The Postal Service does not expect GeM Merchant to create an 
``unfair or otherwise inappropriate competitive advantage for the 
Postal Service or any mailer, with regard to any other party (including 
small businesses).'' Id. at 5 (quoting 39 U.S.C. 3641(b)(2)); see 39 
U.S.C. 3641(b)(2). The Postal Service states that at least four 
companies presently offer similar services, including one small 
business, which the Postal Service has contracted with. Notice at 5. 
Furthermore, the Postal Service represents that the proposed GeM 
Merchant market test would not directly compete with small businesses 
offering niche regional and freight-forwarding services because those 
small businesses serve a different market than the end-to-end GeM 
Merchant product. Id.
    The Postal Service classifies GeM Merchant as a competitive 
product, asserting that GeM Merchant is designed for international 
packages and are unlikely to contain any letters, and thus, do not fall 
under the Private Express Statutes. Id. at 6; see 39 U.S.C. 3641(b)(3). 
The Postal Service asserts that it faces significant competition in the 
outbound international package delivery marketplace, including major 
competitors with products for facilitating outbound international 
shipments with duties and taxes paid at the time of purchase. Notice at 
6.

III. Contents of Filing

    To support its Notice, the Postal Service filed its proposed 
changes to the Mail Classification Schedule, as well as redacted 
versions of the GeM Merchant model contract, GeM Merchant price ranges 
summary, and supporting financial workpapers. The Postal Service also 
submitted an application for non-public treatment of materials 
requesting that unredacted versions of the GeM Merchant model contract, 
GeM Merchant price ranges summary, and related financial information 
remain under seal. Id. Attachment 1.

IV. Notice of Commission Action

    The Commission establishes Docket No. MT2016-1 to consider matters 
raised by the Notice. The Commission invites comments on whether the 
Postal Service's filing is consistent with the requirements of 39 
U.S.C. 3641 and 39 CFR part 3035. Comments are due no later than April 
11, 2016. The public portions of these filings can be accessed via the 
Commission's Web site (http://www.prc.gov).
    The Commission appoints James Waclawski to serve as an officer of 
the Commission to represent the interests of the general public in 
these proceedings (Public Representative).

V. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MT2016-1 to consider the 
matters raised by the Notice.
    2. Pursuant to 39 U.S.C. 505, James Waclawski is appointed to serve 
as an officer of the Commission to represent the interests of the 
general public in these proceedings (Public Representative).
    3. Comments are due no later than April 11, 2016.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016-06616 Filed 3-23-16; 8:45 am]
 BILLING CODE 7710-FW-P