No pain no gain. The U.S. Postal Service has reduced spending over the past decade but it has come with a downside, notably a reduction in service. Over the past decade the Postal Service has reduced labor costs by $10 billion, improved productivity, and generally reined in spending.
The U.S. Postal Service’s unassuming money order product actually has quite a distinguished history. The government established the United States Money Order System in 1864 as a safe way for Union soldiers to send money home to relatives.
A century and a half later, Americans still find money orders valuable. Last year, over 6 million American households purchased about 100 million of them with a face value of roughly $21 billion. Money orders – among the Postal Service’s most profitable products – generated $159 million in revenue in fiscal year 2015.
Back in the day, advertising mail volumes pretty much tracked the economy, declining in a bust and then rising when a boom eventually came along. But those days may be gone, as our recent white paper, Advertising Mail: Past and Present, indicates.
Yes, ad mail plummeted during the Great Recession, but volumes have lagged behind as the economy has improved.
Customized service. It’s the buzz in many industries, and considered absolutely necessary for success in the delivery industry. So it might seem strange to hear about one area where customized service is both expensive and, sometimes, dangerous: the compounding pharmacy business.
The law of unintended consequences tells us that actions, especially on a large scale, may have surprisingly unexpected results. Take the eCommerce boom. The $350 billion eCommerce industry (in the United States) has transformed the retail and delivery business and given the customer greater control of the buying experience.
It’s hard to know whether the U.S. Postal Service should have as its theme song “We’re in the Money” or “Brother, Can You Spare a Dime?” Its just-released financial results for the first quarter of fiscal 2016 suggest both are accurate – depending on how you read the statements.
Your challenge, if you choose to accept it, is to reduce undeliverable as addressed (UAA) mail by 50 percent. Okay, those weren’t the exact words, but that was the challenge put forward 10 years ago by then-Postmaster General Jack Potter.
At that time UAA mail – undeliverable because of an incomplete, illegible, or incorrect address – totaled more than 10 billion pieces, costing the Postal Service $2 billion annually because it must be forwarded, returned, or treated as waste.
Worksharing – U.S. Postal Service program of reduced postage rates to mailers that take on mail preparation or distribution tasks it would otherwise have to do – was once an innovative idea; but it is now the norm in postal operations. Indeed, 85 percent of the market-dominant mail volume the Postal Service processes is workshared mail. Mailers perform everything from applying barcodes to entering mail closer to the destination in return for lower rates.