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Economics & Research Blog

Dr. Joe Rambles About the USPS: Playing the Slots, the UPS Store, Casablanca, and Other Mini-rants

A Brooklyn post office stopped delivering mail,

By Dr. Joe Webb
Published: October 1, 2014

A Brooklyn post office stopped delivering mail, suddenly, when mailbox slots were determined to be too low. This was a shock to residents. The postmaster sent letters that he did not want the deliveryperson to be injured by bending down, and asked for mailboxes to be attached to the outside of the homes. One person complied and reported this experience:

Necha Altman has lived on the street for 35 years, always getting the mail through a slot near the bottom of her door. She installed new mailboxes on the wall after receiving the letter, but that wasn’t good enough for the carrier, who wanted the boxes at street level to avoid her nine steps, she said.

The problem seems to be resolved for now. A report on a postal blog summarized it as the incident being caused by “over enthusiastic” enforcement of regulations. A comment on the blog from “Connie,” however, shows some of the “us against them” (postal worker vs. management, postal worker vs. mail recipient) sensibility that prevents the USPS from finding customer-proactive solutions:

So, they get to keep their illegal mailboxes? Thanks once again postal “executives” for protecting our backsides out here on the front lines!! I guess you don’t like those phones ringing and interrupting your office naps! So typical of the do nothing, six-figure crowd at the various downtowns throughout America.

Mailboxes mail slots are a hodgepodge of sizes and configurations, many from a time when there were little or no official guidelines about their size or placement. Those mail slots in Brooklyn were probably unchallenged from the day of their installation, and may even date from a time when there was twice daily mail delivery. Today, new homes comply with more efficient (for the USPS) delivery with either street delivery (rather than house) or to some central neighborhood collection of postal boxes.

The USPS transition that is currently underway is only more difficult when there are guidelines with seemingly infinite exceptions and grandfathered situations. This issue is more common in old and well-established cities.

But I'm sure Connie would make a great nominee for Postmaster General one day, don't you? She's been out there on the “front lines” in the daily battle against old ladies, old houses, and the suits downtown.

* * *

On a personal USPS note, we're thrilled with our service at a UPS Store that accepts all of our mail and packages from all delivery services. We've also had great and very cheerful service at a contract USPS unit that is part of a hardware store and another that operates out of a gas station convenience store. There, the lines move faster, and they have longer window service hours. The only limitation is that we have to use a USPS site when we need to mail an international package or need some other specialized service. I have also come to like the usps.com service for printing out postage. I only use it for flat rate Priority Mail items since we don't have a scale in the office and flat rate products are perfect for my needs. I get a discount on it by doing so (which is small, but I'd use the service without it) and print out an address label that makes me a bit more confident that it will be routed properly to its destination.

The chart below shows the cost per dollar of revenue for a variety of USPS transaction alternatives. The data are from 2009, but it's probably similar today. A dollar spent at a USPS postal window had a 23 cents transaction cost, but that same dollar at a contract unit was only 13 cents at that time the USPS calculated it. It was actually more when you considered all USPS services.

cato usps 092114

* * *

Following up some other USPS items that I have opined about in the past, their public relations folks took issue with comments from the Software and Information Industry Association that the recent exigent price increase caused a decline in periodical mail volume. I disagree with both of them. The long history of the USPS acting with myopic cost-plus pricing dspite obvious electronic competitors is responsible for the decline, not the exigent price increase. The price increase is a symptom of market irrelevance.

Publishers have known the long term price goals of the USPS for a very long time. USPS has been very clear that they believe that they are losing money on the delivery of magazines and they have great desire to raise prices until they achieve the cost-price balance they need. This has been going on for years, if not decades, and the USPS crisis encourages aggressive price actions in discounted mail classes.

Buyers and sellers make rational decisions based on their current needs, and they make plans based on what they believe to be true about the future. The exigent price increase was just the publishers and their customers acting rationally based on market prices over the long term and what they are likely to be in the future. The USPS response was not helpful. I don't know whether this situation is best described as a “I'm shocked, shocked to find there's gambling going on here” moment or whether the USPS PR response is more like the man who, found guilty for killing his parents, asks for mercy from the court because he's an orphan.

In the meantime, computer technology, communications services, and storage services get cheaper every day, and become faster and more reliable.

* * *

One of the better dissections of the USPS claim that prices are inelastic can be found at the Arandell site. It was done a year ago; sorry for not finding it and posting it sooner.

But even there, the suggestion is made that the USPS can lower prices on some categories of mail and revive some of its volume. Just like the SIIA jumped all over the exigent price increase as the cause of the recent periodical decline, the USPS could lower prices and volumes could still go down. I doubt that they could lower prices enough to make a difference in volume in the short term.

Content strategy is not something you turn on and off like a spigot. I think the USPS has greatly underestimated the costs, planning, and investment required to comply with their regulations, and that those suggesting volume could have a relative surge with price decreases underestimate how deep the desire to avoid the mail and exploit digital media is.

When I talk to marketers, especially young ones, they're not even thinking about mail. They're focused making their digital media more effective separately and together. Getting mail into their thinking the way it must for them to change long term strategies is unlikely. It's not a matter of getting decision makers back – those original decision makers are long gone. This generation of media decision makers has a frame of reference for judging media effectiveness that is significantly different than the traditional proponents of mail have.

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Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink's Economics and Research Center.



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