• on Jan 21st, 2013 in Ideas Worth Exploring | 4 comments

    The U.S. Postal Service can play unique and positive roles in the expansion of the peer-to-peer marketplace, as suggested in a new OIG white paper, Peer-to-Peer Commerce and the Role of the Postal Service. American consumers are familiar with peer-to-peer (P2P) digital commerce and increasingly comfortable buying and selling that way. Millions of people place offerings and shop on eBay, Craigslist, etsy, and other sites every day. In recent years, the P2P segment has grown beyond these traditional product sites and now includes services from which users can rent a vacation room in someone’s house, lend or borrow a private car, or even hire someone locally for small jobs, such as baking cookies for a child’s classroom party or assembling modular furniture. However, there are a number of problems in current P2P commerce that may prevent wider adoption by the American public. Market participants face the challenges of balancing convenience with privacy and the potential for economic or physical harm. Some of these issues can be addressed through enhanced digital identity and authentication services, but there are other opportunities, which the paper presents. The paper describes P2P digital commerce and challenges and gaps in the current marketplace, including several types of fraud and threats to personal property and physical safety. It then identifies Postal Service products and services that exist today or might be developed in the future to facilitate market expansion. Current postal ancillary and special services, both physical and digital, are well suited to the P2P market. These include insurance, Registered Mail, Certified Mail, Collect on Delivery (COD), Track and Trace, Return Receipt and Return Receipt for Merchandise, Restricted Delivery, and other services. Please share your comments on this concept as well as observations on your own P2P experiences, if any, below. Do you believe a trusted intermediary such as the Postal Service could help in this segment? Please give us your comments below:

  • on Jan 14th, 2013 in Ideas Worth Exploring | 6 comments

    Even with smartphones, high-speed Internet, and other modern technologies, Americans spend an inordinate amount of time running errands. Interacting and conducting business with our government is no exception. It can be time-consuming. Wouldn’t it be great to use the local Post Office as a one-stop center for doing business with government? Or, what if the U.S. Postal Service had a digital platform to access government services or information online? Last week, the OIG released a white paper called "e-Government and the Postal Service — A Conduit to Help Government Meet Citizens’ Needs.” The paper identifies opportunities for the Postal Service to partner with other agencies to better connect with citizens, improve services, cut costs, and reduce duplicative and wasteful services. By providing e-government services, the Postal Service could help the government save money. There has never been a better time to do more with less. Through the Postal Service, individuals could send secure messages to government agencies, convert physical documents to digital records and send them instantly, apply and pay for permits and licenses, and access other crucial services. The Postal Service could also verify a person’s identity for sensitive or complex transactions. In addition, the Postal Service could lease unused Post Office window space to other agencies, so citizens could have a convenient access point for face-to-face services across the government. Business owners could use the Postal Service to look up information on regulations and laws affecting them, learn about federal small business loan opportunities, file information with the IRS and other relevant agencies, and submit all necessary forms and documentation through the Postal Service’s secure messaging and identity authentication services. Or, these things could be done in one visit to the Post Office, rather than separate stops to numerous agencies. Do you think the Postal Service could serve as a one-stop shop for government services?

  • on Jan 9th, 2013 in Finances: Cost & Revenue | 3 comments
    Some have argued that the U.S. Postal Service should be allowed to raise prices in order to increase revenue and ensure that the sales of their products cover their costs. Others have argued that the current costing system may overstate the cost of some products, as it assumes the Postal Service is able to adjust its capacity, such as quickly closing a facility or eliminating a tour, to match the decline in mail volume. So, the second argument goes, if the Postal Service is unable to adjust its capacity, it should temporarily lower the prices of certain products, in order to encourage volume, as it did in the past with its “summer sales.” The latter argument was briefly discussed in the OIG’s recently released paper “A Primer on Postal Costing Issues.” As a follow-up to that paper, we asked Professor Michael D. Bradley of George Washington University, an expert in postal economics, to co-author a paper on the use of short-run costing and pricing. Essentially, short-run costing varies from the current costing system in that it does not assume that the Postal Service can reduce its capacity as fast as volume falls. Using short-run costs to develop prices would allow the Postal Service to temporarily lower prices, at least on some products, to encourage volume that would make use of the excess capacity while the Postal Service creates a plan to reduce the excess capacity. However, the paper warns that short-run costs should only be used to set prices if they can be measured accurately and updated regularly and the Postal Service can be sure that a lower price will lead to a large enough increase in volume, otherwise they will simply lose revenue. Other issues that need to be considered when using short-run costs to set prices include:
    • Using short-run costs can result in prices that may generate additional revenue in the short term but will still not allow the Postal Service to cover its institutional costs.
    • Prices based on short-run costs would be more volatile.
    • Customers may be unsure as to whether prices are permanent or temporary.
    • Accurate measurement is difficult and would require significant effort from experts in postal operations.
    • The Postal Service may lose the incentive to shed the excess capacity.
    What do you think – should the Postal Service lower prices on some products to reflect current excess capacity? Or would lowering prices only lead to further revenue declines?

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