• on Oct 13th, 2009 in Strategy & Public Policy | 15 comments
    When the topic of competition for the Postal Service comes up in casual conversation, the discussion usually involves FedEx or UPS. However, packages are a relatively small part of the Postal Service’s business. Certainly, these firms are direct competitors, but are there other competitors for Postal Service business? What alternatives compete with each of the various Postal products? What, if anything, can the Postal Service do to better compete in each product line? This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Aug 17th, 2009 in Pricing & Rates | 24 comments
    Since the earliest days of the Post Office there has been a public policy goal of promoting the dissemination of information throughout the country. This goal was also part of all 14 of the rate cases conducted under the Postal Reorganization Act. By law, rates had to consider “the educational, cultural, scientific, and informational value to the recipient of mail matter.” This provision generally tempered the increases for Periodicals, or at least kept the “institutional cost burden” for Periodicals to a minimum. In fact, in the final rate case in 2006 before the new price cap system of the Postal Accountability and Enhancement Act took effect, the “markup” on Periodicals was only 0.2 percent. Periodicals prices were set so that revenue was only 0.2 percent above attributable costs. The average for all mail was 79.3 percent.

    The two price adjustments since that final rate case have been capped by inflation. Under the old rate case process, the increases would have likely been greater so that the prices covered the Postal Service’s costs for handling Periodicals. In fiscal year (FY) 2008, Periodicals revenue did not cover costs. In fact, the cost coverage (the ratio of revenue to attributable costs) was only 84 percent. (In rate cases, the recommended prices had to be at least 100 percent of costs.) The new law includes the price cap as an incentive for cost containment, but also says products should cover their costs.

    So what do you think? Should the Postal Service try to increase Periodicals prices beyond the cap? What role do Periodicals play in the mailstream? What takes precedence: the cap or a requirement that products cover cost? Should the price for a flat that happens to be a magazine be significantly lower than the exact same flat that happens to be a catalog?

    This blog is hosted by the OIG's Risk Analysis Research Center (RARC).

  • on Nov 19th, 2008 in Post Offices & Retail Network | 29 comments

    The Woodfield Station located in Schaumburg, Illinois is an innovative, new retail environment that tests the limits of how the United States Postal Service interacts with customers and sells products and services. Dubbed the “Retail Learning Lab,” this completely redesigned post office serves as a testing ground for new products, new methods of serving customers, and new models for partnering with commercial businesses.

    The site features specially designed, free-standing self-service shipping areas, an expanded retail product display, several Automated Postal Center (APC) kiosks--some equipped with barcode scanners--and a DVD rental machine. It also features a comfortable seating area with free WiFi access, conference room rental, and an OfficeMax IMPRESS "store-within-a- store" offering office supplies and print and copy services.

    A significant feature is the open retail environment which encourages associates to interact differently with customers. Most customers are greeted at the entrance by an associate who offers to help meet the customer's needs for his or her visit. If appropriate, the employee escorts the customer within the store and offers solutions or explains how to complete tasks.

    Would you be more inclined to visit the post office if it offered a greater variety of self-service options? What if it offered services like WiFi and DVD rental?  What other innovations would you like to see at the post office locations?

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