• 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 Jul 7th, 2014 in Products & Services | 3 comments

    It’s no secret what the advent of digital technology has done to mail volume, particularly First-Class Mail. But there’s an emerging digital technology catching hold that could be a boon to the U.S. Postal Service. It’s called 3D printing, and it’s expected to increase the number of lightweight parcels, a segment of the parcel market where the Postal Service excels.

    3D printers build solid objects usually one razor-thin layer at a time using plastics, powders, metals, polymers, or other materials. Examples include one-of-a-kind jewelry, custom-fit dental implants or hearing aids, unique iPhone cases, and the like. Mostly small-size things, at least so far. But one of the big advantages of 3D printing is the ability to customize just about anything to anyone’s taste or whim, and people increasingly like custom-made products.

    Retailers are already using 3D printers to make these kinds of goods, which consumers are buying and having shipped to them. The total 3D printing industry was valued at around $3 billion in 2013 but is expected to grow to $16.2 billion by 2018. And as it grows, 3D printing could lead to more single-item parcels being shipped to consumers over shorter distances, instead of hundreds of thousands of identical items sent by containerized cargo over vast distances.

    In our new white paper, If It Prints, It Ships: 3D Printing and the Postal Service, we explore how 3D printing could lead to an increase in packages delivered by the Postal Service representing $485 million in new annual revenue. Emerging 3D printing businesses could take advantage of the Postal Service’s unique and ubiquitous first- and last-mile network: Carriers already delivering mail every day, making the addition of lightweight parcels easy and cost-effective. And the Postal Service could partner with 3D printing businesses, perhaps using excess space in postal facilities, to help streamline the fast delivery of 3D printed goods.

    Tell us what you think:

    • How much experience have you had with 3D printing?
    • In what areas do you think 3D printing will have the most impact?
    • How could the Postal Service adapt its business strategy to handle a rise of 3D-printed goods?
  • on Jun 30th, 2014 in Products & Services | 7 comments

    Maybe this is the first time you’ve heard the term “collaborative consumption,” but even if it’s not, chances are you’ll be hearing it a lot more. It refers to an economic model based on renting, lending, and sharing goods instead of buying them. In fact, not long ago, Time magazine listed it as one of “10 Ideas That Will Change the World.”

    Collaborative consumption is very popular among Millennials, who increasingly constitute a culture that likes to rent just about everything from clothing to tools. For one thing, rental prices are lower than purchase prices, which not only is nice on the wallet but also significantly increases the number of items from which to choose.

    Rental culture is not entirely new – remember DVDs from Netflix? – but it is growing. In 2013, Forbes estimated the revenue from the sharing economy will exceed $3.5 billion, representing more than 25 percent growth over the previous year.

    While people certainly do still buy things, especially online, the ownership culture primarily involves one-way shipping except for the occasional returns. Rental culture guarantees two-way shipping every time, or double the revenue, for carriers like the U.S. Postal Service.

    Some think the Postal Service is already well-positioned to be a major player in rental culture shipping. It delivers to rural or remote areas at the same prices as urban addresses while other carriers charge more to deliver to rural areas. Moreover, the Postal Service’s roughly 30,000 post offices across the country mean renters wouldn’t have to look far for a shipping point when return time comes, or just put it in the mailbox for the mail carrier to take. And flat rate boxes mean renters immediately know the cost of shipping without having to weigh anything.

    Tell us what you think: Do you use these kinds of rental services? How should the Postal Service actively pursue the rental-shipping market? Or do you think rental culture is really just a fad? 

Pages