Two weeks ago, USPS reported a $3.3 billion dollar loss for the quarter ending December 31st, 2011 – typically its strongest period. At this rate, the USPS will run out of cash by this October. When it looked like it couldn’t get any worse, USPS announced it will cut 35,000 jobs this week.
It’s sad to see a staple of American history at such a low, and to watch it continue to deteriorate. USPS is one of the oldest establishments in America, inaugurated when Benjamin Franklin appointed the first Postmaster General by the Continental Congress in 1775 – that’s right, even before the Declaration of Independence was signed. Why is this happening and how can the post office fix it?
Why is USPS failing?
(1) USPS positioning: Personal vs. Business Mail:
There was a time when USPS was the only major mail courier in America. That time is long gone and now USPS is struggling to adapt. In the past, personal and business mail was handled at USPS. Today, much of the business mail, which is the most profitable mail delivery segment, is handled through other couriers such as Fedex, UPS, or DHL. Although USPS has developed a business model to cater to companies, such as scheduling a pick up from a business, creating an account online to manage shipments, the other three providers execute these services better.
(2) Digital Technology:
With regards to personal mail, no longer is the world’s population required to communicate through mail. Advancements in technology, from fax machines to the internet and email allow the world to communicate instantly, and for free. As a result, the sale of stamps and the number of letters sent are assumed to have decreased significantly, and will continue to do so. The only letters USPS delivers on a regular basis are bills, and credit card offers.
(3) Government run:
It is a sad truth, but USPS is a stereotypical government run organization; a provider of basic services, weak, inefficient, understaffed, lack a vision, and an overall hassle to deal with (think of the perception of the DMV). Government run organizations do not work to maximize profits, or even maximize service – they always seem to lack drive.
Have you ever visited the post office at lunch? In most cases, you will lose 45 minutes of your day waiting in line to mail letters/packages. Though the self-service machine does reduce the wait time, if cannot help help with all inquires and therefore is not effective on a consistant basis. For instance, if you are sending a package over 13 oz., you can pay for the package at the self service machine, but you are not allowed to place it in the self service bin, and are then required to wait in line which defeats the whole purpose of the self service machine.
(4) USP: Flat-rate package:
Have you ever visited the USPS website? It looks cool, but does not function well. The “tab” functionality doesn’t work logically, it’s easy to get lost within a page due to the design, and there are many missing pieces with regards to product descriptions. Worse of all, if you call customer support through the website, they cannot help you. 30 seconds on the call with customer support, and it is clear the representative on the other end of the line is not an employee of USPS. USPS outsourced their customer service to a 3rd party, whom are unable to answer all your USPS questions by phone.
Every company has a “USP” or unique selling proposition. An USP should differentiate a company from its competitor, and help answer the question, “why should we do business with you?”
Well, with all the negative components that have been mentioned, what could the post office’s USP be? It’s the flat-rate package. The flat-rate package allows you to ship anything, of any weight, anywhere in the USA, for one price. “If it fits, it ships.”
Sounds cool, right? It is. And USPS is the only mail courier to provide a service like this. Do you know why USPS is the only one to provide this service? Because it’s a dumb idea – from a customer perspective, and also from a business perspective.
The more a package weighs, the higher the cost USPS incurs to ship the package. Ok, we get it: if everything costs the same to ship, then on certain occasions, let’s say – if one were to ship two bricks across the country, USPS would lose money. But, USPS would make money if one replaced the bricks with popcorn. Right? Theoretically, yes, this is correct. But in reality, customers will not pay a higher price to ship a package. Why would anyone pay $7 to ship something that would cost them $3 – especially when the $3 service is available in USPS?
How to fix it:
First, USPS should address all the problems mentioned above. Second, there are some aspects of why USPS is failing that cannot be fixed. For example, it will always be government run, and the day governments can efficiently run their organizations will come after toads evolve into birds. Also, technology continues to innovate faster than ever. Today, there are applications on smartphones that allow users to send virtual postcards. The more technology innovates, the less of a need there is to use the post office for personal mail. So, what can the post office do?
(1) Extend post office hours:
Starting from square one, USPS needs to make some basic changes to improve its bottom line. First on the list, extend the post office hours. The post office opens the same time most people get to work, and closes as they leave work. How the heck are people supposed to go to the post office conveniently?
(2) Fix website:
Another basic change, fix the website. It is very easy to use, but not at all easy to follow. Plus, it seems to have a lot of bugs. Have a good QA team scrutinize it and make the changes needed. Also, provide more information on the site – or better support.
(3) Reposition organization:
Get rid of the flat-rate and focus on the business segment/account management. As the world moves to paperless delivery methods, receiving personal and business letters will soon be a pleasant surprise. Magazines will stop mailing to homes, companies will enroll as many customers as possible into online billing, and credit card companies will stop (thankfully) sending credit card applications. Good thing there will always be Valentine’s Day and other holidays for people to send cards and letters to each other.
Since personal mail and letters are on the decline, the best plan for the post office is to focus on streamlining the packages process (allowing customers to place a package more than 13 oz. in the self service bin), proper account management including username/password that can be completed with every transaction (would also store credit card information for customer convenience), and marketing their services to businesses.