• on Jul 14th, 2014 in Pricing & Rates | 5 comments

    No one can accuse the U.S. Postal Service of following the pack. It not only dismissed the strategy of pricing packages based on size as well as weight (referred to as dim weight pricing); it actually plans to lower prices for a good portion of its flagship Priority Mail products.

    Few were surprised when UPS recently followed rival FedEx’s lead and announced it would price parcels based primarily on how much space they take up during transport. The new pricing scheme is expected to generate significant revenue for the two integrators. Industry observers were curious to see if the Postal Service would jump on the dim weight bandwagon, or if the agency saw a better opportunity in trying to poach customers with its simpler pricing scheme. Few predicted the Postal Service would lower prices.

    Not all Priority Mail prices are going down, however. Retail prices on Priority Mail flat-rate boxes will in fact increase by 1.7 percent on average, if the Postal Regulatory Commission approves the Postal Service plan. For example, the small flat-rate box would increase 35 cents to $5.95 on September 7, if approved.

    Still, small mailers could save by printing their own labels either from the Postal Service’s Click-N-Ship online offering, or from PC Postage products, permit imprints, or digital mailing systems. Using an online option moves customers into Commercial Base pricing, where they will get lower prices, on average, under the Postal Service proposal. The biggest price cuts – about 2.3 percent on average – would come in Commercial Plus prices, which require a commitment of 50,000 pieces in a year.

    The Postal Service’s Priority Mail has seen solid growth over the past 3 years (25 percent in revenue). But postal officials have indicated they want to capture more business shippers and this price cut is one initiative meant to attract those commercial customers. Some observers think that, even without the proposed price break, the Postal Service would have won customers from UPS and FedEx once their prices increased. But others suggest the reduced rates might entice even more business customers to try the Postal Service.

    Should the Postal Service lower its Priority Mail prices, keep them the same, or raise them slightly given an expected migration from UPS and FedEx? 

  • on Nov 26th, 2012 in Ideas Worth Exploring | 18 comments
    This holiday season many of us will find ourselves rushing from one errand to the next, often visiting a variety of stores to accomplish all of our tasks. Wouldn’t “one-stop shopping” be easier? Wouldn’t it be nice to get everything from shopping to wrapping to shipping taken care of in a single trip? Locations offering a multitude of services potentially increase foot traffic because of the convenience they offer. They also create opportunities for the company to sell more products and services to its customers. In other countries, such as Sweden and Australia, the trend has been toward placing postal counters in grocery stores and pharmacies, often located in shopping malls. Customers can buy stamps or ship their packages while they are shopping for food and other staples. In the United States, grocery and other retail stores sell stamps at check-out counters, but do not offer shipping options. Office supply and other approved shipping stores offer a range of Postal Service mailing services including Priority and Express mail. Customers find that using these stores for their mailing needs saves time and effort because many of these retail outlets have longer hours than post offices and are conveniently located. E-commerce and mobile commerce have proven to be a popular choice for consumers who enjoy the convenience of shopping at home. Online retailers ship directly to the purchaser’s home, or wrap and ship gift purchases directly to their recipients. If customers want to wrap the package or gift themselves, the Postal Service’s Carrier Pick-up service will retrieve the package at their doorstep for shipping. While e-commerce and mobile commerce can offer purchasing, wrapping, and shipping from home, some people prefer physically browsing and purchasing items from brick-and-mortar retail outlets. This holiday season, a shopper might first visit a retail outlet to make your purchases, go home and wrap the gifts, and then go back out to ship the item. That's at least three trips and two lines, just to send one package! Does shopping, purchasing, wrapping, and sending your item in one stop sound better? With postal counters in strategic locations, all of your needs could be met in one stop. Would gift-wrapping services be an added bonus? If Post Office functions could be moved into retail spaces, what areas or types of stores best lend themselves to this effort? Share your ideas in the comment section below.
  • on Oct 8th, 2012 in Delivery & Collection | 10 comments
    The digital revolution has changed communications, and with it, the operations and finances of the U.S. Postal Service. It also has brought deep changes in the way we design networks and analyze systems. Many organizations rely on mathematical modeling to test ideas before they become operational, conserving money and time. The Postal Service, facing limited capital and resources, has also adopted this practice. It is discovering how important these tools are for assessing strategies for designing the future mail network. The Office of Inspector General has explored some of the main components of the postal supply chain - retail, mail processing and transportation, and delivery – using a systems modeling approach. This approach has allowed the OIG to use objective methods to determine how the network could be redesigned to meet current needs and future demands. This research also helps us to understand some of the challenges in developing information-based decision models for the Postal Service. A primary challenge in any modeling effort is collecting the necessary information. Without this data, the model cannot fully assess the efficiency of the operations it is modeling, and develop an optimal network solution. Postal information systems can be a complex array of the hundreds of highly varied and specialized information systems that are often developed and maintained under separate contracts. Simplifying this landscape also could enable more insightful analyses to better guide decision makers. As the Postal Service considers how it can best serve the public through its products and services, modeling efforts can help it to evaluate different proposals for change. As we develop better efficiency standards with more rich data sources, we can not only better evaluate the efficiency of operations and system design, but we can better explore how operations may be changed to meet the needs of new environments.

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