• on May 25th, 2015 in Ideas Worth Exploring | 52 comments

    The U.S. Postal Service is best known for delivering the mail. But did you know it’s also the number one seller of the most widely used type of alternative financial service in the United States? We’re talking about money orders, which function like prepaid checks. The Postal Service sold a whopping 97 million of them with a face value of $21 billion in fiscal year 2014.

    The Postal Service also offers international money transfers, prepaid gift cards, and limited check cashing. From 1911 to 1967, it even offered savings accounts through the Postal Savings System, which prompted millions of Americans to move a portion of their nest eggs from under the mattress into savings accounts.  

    In our recent white paper, The Road Ahead for Postal Financial Services, we explore how the Postal Service could expand its financial offerings to benefit Americans and generate much needed new revenue. (This is a follow-up to our January 2014 paper, Providing Non-Bank Financial Services for the Underserved.) We hired financial consultancy Mercator Advisory Group to help us look at the pros and cons of several different approaches the Postal Service could take. But we dove deepest into what it probably is allowed to do under current law; namely, beef up and improve existing products and expand into adjacent, related services like payroll check cashing, domestic electronic money transfers between post offices, and walk-up bill paying. Our analysis shows that – assuming Postal Regulatory Commission approval – a suite of these potentially allowable products could, after a 5-year ramp-up, bring in $1.1 billion in annual revenue while covering costs and contributing profits.

    We welcome your input. 

    • Should the Postal Service look at new business lines that are not directly related to mail and delivery?
    •  Which financial products do you think the Postal Service should provide? 
    • What do you think are the biggest barriers to success in postal financial services?  
  • on May 1st, 2015 in Mail Processing & Transportation | 1 comment

    Here’s the good news: Mailers accept and support the U.S. Postal Service’s Seamless Acceptance (SA) program. And here’s the bad news: Implementing the program hasn’t been very seamless.

    Ongoing data integrity problems, among other concerns, have delayed full implementation of the program. We found evidence of inaccuracy in the data and mailers raised similar concerns, prompting them to ignore the data, according to our recent audit report.

    Not the most auspicious start to a program designed to increase the efficiency of commercial mail entry, verification, and payment. Still, everyone involved wants the program to succeed. SA is expected to make mail acceptance faster and less complex, standardize the acceptance and verification process, and allow for a trend-based quality measurement system.

    Seamless Acceptance uses electronic documentation from a commercial mailer, intelligent mail barcodes, and various scanning devices to verify that the letter and flat mail a mailer is entering meets the Postal Service’s acceptance thresholds and that proper postage is collected. Twenty-nine major mailers have volunteered to participate in SA, tendering about 1.7 billion mailpieces each month. Another 288 mailers volunteered to participate in a preparatory phase of the program known as Seamless Parallel, which helps introduce mailers to SA.

    Our recent audit report noted that while the Postal Service has reported progress in implementing SA, delays continue due to ongoing data integrity issues, as well as customer service and communications hurdles. The Postal Service’s initial goal was to have the full SA program in place by last September. But a series of delays has pushed that date back to July 2015. Notably, problems remain with the scorecard data provided to mailers; postal staff members have limited access to relevant reports and data; and there is inconsistent communication between the Postal Service and participating mailers.

    If you are a commercial mailer currently participating in SA, what are you seeing in terms of data quality, customer service, and communication? If you are not a current participant, are you interested in joining the SA program? If not, what is holding you back?

  • on Apr 27th, 2015 in Delivery & Collection | 12 comments

    The Midwest is the nation’s “breadbasket.” New England has its Patriots. Appalachia loves its bluegrass music. And it never rains in Southern California. We all associate certain things with different regions of the country. Now, it seems, one of those things is mail volume. 

    The decline in mail volume may be more nuanced than some realized, data in our new white paper suggests. Take the drop in First-Class Mail (FCM), for instance. The math clearly shows that from fiscal years 1995 to 2013, FCM single-piece volume fell by a total 61 percent nationally. But a close look into the geographic details reveals the rate of FCM decline varies widely by location. So widely, in fact, that the U.S. Postal Service should keep it in mind as it right-sizes its network and considers new products and services. 

    Everything’s bigger in Texas, right? In Dallas, the percent of FCM volume lost was far greater than 61 percent, while in other areas – like Charleston, WV – it was close to zero. Moreover, the rate of decline is slowing or has even stopped in many of the areas that have lost the most mail volume. The details are all in Declines in U.S. Postal Service Mail Volume Vary Widely Across the United States.

    We know from the most recent Postal Service Household Diary Study that college graduates consistently send about twice as much mail as people without high school diplomas, and mail use in general increases substantially with income and age. However, the rates of mail decline are very similar across these demographic groups. We’ll need to look elsewhere for a good explanation of why mail use varies so much by region.

    As the Postal Service continues to adjust its network and its strategy for the future, it must be mindful that the needs of its customers vary at least as widely as these differences in mail volumes. Simply put, there is no average or typical postal customer. Strategic planning designed around average mail volume data will inevitably result in inefficient solutions. The Postal Service would therefore do well to try gaining a better understanding of why these varying rates of FCM decline are occurring.

    Tell us your thoughts: Why do you think mail volume declines vary by region? Do you see an opportunity to launch “regional” strategies of any kind?  

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