The United States Postal Service is in trouble. Severe financial problems are looming due to pension funding issues and structural changes in the economy that move us away from physical mail. While I'd love to see a political change to the former, the latter seems inexorable. It's not so much that we are moving less stuff through the "mail" (though the decline of first class postage is well-documented), quite the contrary: shipments of packages to people's homes are at an all-time high. The real structural problem at the USPS is that the margins on physical goods transportation are in precipitous decline.
Consider this simple example:
There are clearly many factors that go into the cost of shipping a package or a letter. But the last time a first class letter was $.15/oz was in 1978 -- and that $0.15 in 1978 actually buys you nearly $0.45 worth of goods today. In fact, it has never been cheaper to move goods around the United States than it is today -- thanks to technology, innovation and infrastructure developed in the public and private sectors.
So the USPS has always been able to extract a heavy premium for its "mail service" throughout the history of the organization, whether through monopolistic or simple demand-supply practices. Now, this lucrative channel (both first class and bulk mail can be seen through a similar lens) is dying -- squeezed at the top by express delivery and email and at the bottom by email and courier services.
The USPS is -- in other words -- the middle market company, trying to milk its cash cows while significant innovation disrupts the landscape. But while I don't normally get nostalgic about a service like the post office, I do think there are still a wide range of interesting things that the USPS can do to turn itself around. Here then are a few simple -- though by no means comprehensive -- ideas:
Go Digital, Make Money
If you've ever tried to use a digital mail service like Earth Class Mail (whom I adore), or you've had a postal box, you know how hard the post office makes it to divert your mail to another location (think: notarized forms in duplicate, etc). Why not buy Earth Class Mail itself or launch a USPS-branded mail scanning and forwarding service? After all, if less actual mail is ultimately delivered, it saves on headcount costs in the medium term, helps the environment and puts the organization into the "digital mail stream" of the future.
Raise the Price of Stamps to $1
Smaller countries like Norway, Israel, Japan and Denmark price domestic postage near $1 per letter, and even poor nations like Mexico charge more (in USD terms) to mail a letter than we do. Although it might cause some sticker shock and is likely to push some marginal mail to the Internet, first class mail pricing should reflect what it's become -- largely a luxury or administrative requirement rather than a necessary feature of daily life. If we start seeing it as the optional service it is, we can start pricing it accordingly.
Let Everyone Print Postage Easily
Right now, printing your own postage is convoluted, expensive and cumbersome, requiring a subscription service (at or above $20/month base) and/or specialized equipment. Worse yet, the alternative is to go into one of the nation's dwindling post offices yourself, line up and shop. But what if printing a stamp was as easy as buying an app on iTunes? Why not let everyone setup an account that generates a unique 2D barcode instead of requiring stamps? Record the number of scans made and bill folks at the end of the month. Heck, you can probably even do it through iTunes itself, and validate the mail by scanning each piece as it passes by. Regardless -- reducing the friction to use stamps is sure to raise their utilization.
Make Mail Fun
While you're at it, why not expand people's ability to make and use custom stamps? The USPS could use crowd games and gamification to encourage more consumer participation in stamp and philately design/production, and possibly even use the techniques to reduce junk mail and peer-to-peer postal delivery. They have long been innovators at the use of surveys to pick specific stamps, but there's so much more potential here.
On a different (but similar) tack: imagine earning status or benefits for helping to distribute the mail in your building or block, or by being the person who receives packages in your local area for your neighbors. It sounds crazy, but monetizing unused resources and engaging communities with game-like mechanics works for startups like AirBnB, RelayRides and GetAround -- and it can work for the post office too. In fact, this happens informally in many neighborhoods (including mine in Harlem) -- and I think that a gamified community layer could be extraordinarily powerful.
In short, the USPS has tremendous potential to innovate itself out of the hole it's in. Whether it's fixing the UI/UX problems of the post office (both online and off), or engaging communities and resetting pricing, there are myriad options at their disposal today. Why oversee the demise of postal delivery when you can reinvent the organization for the future? That's a question I think USPS executives -- and the 300 million plus customers they serve -- should clearly be asking.
Follow Gabe Zichermann on Twitter: www.twitter.com/gzicherm
These are all great suggestions for change. It's hard to effect change in a government organization but it can be done. Congressional approval is definitely a problem since they couldn't agree on when to fart much less anything of value these days. My personal opinion is raise the first-class postage rate. That is probably the easiest thing to fix short-term. I would pay $1 for first-class because I rarely use USPS services.
Back in the early 90's Marvin Runyon (former ceo of tva) was made Postmaster General. He came with a business background and was full of ideas to reshape USPS. It is very unusual to name someone from the outside much less the business world.Most of his ideas were killed by the unions as they refused to allow larger cuts in the workforce size. Limited to downsizing by voluntary retirement his hands were tied. In the early 90's labor represented 80% of the USPS budget - mind boggling. The union started calling him on the carpet for petty things and the feud got so bad that Runyon quit.
Unions are the culprit here. If the USPS was a private business is there any doubt that they would look completely different now?
Much better than turning over control of email to the USPS and allowing them to charge like those two geniuses I read a few weeks back...
One real need is to modernize USPS money order services. They should compete directly with Western Union with electronic fund transfers. Many people cannot afford and do not need bank accounts; economical m.o. or eft's wold do nicely. There used to be a national Post Office Savings Bank. We don't need that now, but payment services would be good.
. We also deliver all mails from foreign countries and allow our citizens to send mail to loved ones in
far away military posts, Navy ships and foreign countries. Would you want to kill this service???
Would you want some business that pays their employees minimum wage to deliver your important retirement checks. You would probably never see them. Postal employees are honest and hard working. They work in extreme weather to make sure you receive your medication and other important needs. They save lives because carriers care for their customers and know them.
The US needs to upgrade its infrastructure - this would be one way of doing it.
Before we throw in the towel on the USPS, let's raise the postage to $1.00 to be sure the operation is solvent, and see how the new rate works for everybody.
I think a good idea would be to make residential delivery be every-other-day. It's just bills and advertising anyway, I can wait an extra day for this junk. That would allow each carrier to double the size of his route and drastically cut down on the workforce and the expense of driving every neighborhood daily.
I think PO boxes and businesses should still get mail daily, so if you're a mail junkie your Target ads will still be there for you.
If the USPS wants to stay in business, they should price according to what the market will bear. Without competition, we cannot readily determine what that price should be.
The USPS is very inefficient. Costs are way too high, and without competition there is little incentive for them to improve. Even with a monopoly position they are failing. If they cannot provide a competitive service, then disband them and save the taxpayers some money.
Why not just allow the USPS to challenge the commercial services head-to-head.
Maybe a new company will emerge after the USPS is gone, to delivery only direct ads on a weekly basis door-to-door. Get a nice website instead.
The best solution is in your second paragraph. Open up letter delivery to competition and give me options. Allow UPS and FED-EX to deliver to mailboxes and I'm certain service will improve and prices would come down.
And my mail isn't junk. Our advertising letters are directed specifically at individuals in need of our services.