Five tips for avoiding bankruptcy/bailout.
It’s pretty big news, every once in a while, that the U.S. Postal Service (USPS) — which is not funded by tax dollars — is on the verge of going broke. Then they raise rates by a few pennies and the hubbub dies down.
Until next time.
I think the big problem with the USPS is that it’s unable to keep up with changes in technology that make its core business model nearly obsolete. After all, the main business of the post office is to provide mail delivery service. In the past, this included personal and business letters, bills and bill payments by check, postcards, and other bits of correspondence. Letters have been mostly replaced by fax and email. Bills and bill payments are being replaced by online billing and bill payments. And who sends postcards in the age of smartphones when you can share vacation pictures as you take them via MMS or email?
As technology moves on, the USPS’s services are less and less needed. But does that mean they’re not needed at all? Of course not. (Not yet, anyway.)
Bad management and spending practices by the USPS are what’s putting it in peril these days. Simply said, the USPS needs to cut costs and raise revenues. Here’s what I propose:
- Raise prices on bulk mail. It’s widely known that the USPS gives huge discounts to big customers — the same people who fill your mail box with what most of us consider “junk mail.” Not only is this extremely wasteful, but the USPS isn’t making nearly as much money delivering it as it could. I propose that they raise the rates on bulk mail — possibly even making it just as costly as first class mail. The result: fewer organizations will find it cost effective to mail their marketing materials to people who likely don’t want it anyway. The USPS will carry less of this material, thus reducing its costs. And for the remaining organizations that continue to utilize the service, the USPS will likely generate the same (or more?) revenue.
- Stop trying to compete with FedEx or UPS. Let’s face it: for sending something overnight, FedEx is not only the best deal, but it’s got the most reliable service. Not long ago, the USPS couldn’t even guarantee overnight delivery from Wickenburg, AZ to a major city like Berkeley. FedEx could. As for shipping parcels, I recently shipped a 33-pound computer that I sold on eBay; UPS was half the price of USPS. Yet every time I go into the post office, I see advertisements pushing their services. The USPS should focus on what it does best: deliver small pieces of mail quickly and efficiently throughout the US. That means concentrating on its affordable Media Mail, First Class, and Priority Mail services.
- Stop advertising. Come on — we all know that the post office exists. We all know what it does. You don’t need massive advertising campaigns to get customers. If I have to mail a letter or document and it doesn’t need to get there overnight, I’ll use USPS. And about those big color posters in the post office pushing your overnight services — see my previous point.
- Stop giving away free packing materials. I’m talking about those priority mail envelopes and boxes. I know someone who used USPS priority mail boxes to pack when she moved. And no, I’m not kidding. She kept going to the post office and taking boxes. Not a single thing was mailed. I’m not saying that the USPS should stop providing them; I’m saying that they should charge a fee — even something small, like 50¢. It’s worth the money to customers — I’d definitely pay it — and it will generate more revenue while reducing waste.
- Reduce mail delivery to three times a week. This is the ultimate in cost cutting measures. Unfortunately, it also causes job losses. But guess what? Real companies reduce their workforce to save money; why shouldn’t the USPS? The way I see it, they could deliver to business and commercial addresses on Monday, Wednesday, and Friday and use the same carriers to deliver to homes and residential addresses on Tuesday, Thursday, and Saturday. People who think they really need daily mail delivery can get a post office box, which would receive mail every day as it’s sorted at the post office. Not only does this reduce the cost of delivery, but it could increase revenues from post office box rentals.
So that’s five tips that will help reduce costs while increasing revenues. Why can’t the USPS utilize some combination of these? I think the results will make a huge difference in the continued operation of the USPS as a solvent business.
Comments? Have your say.