Sunday, December 18, 2011

BIG’s Blog: Where is the Post Office Going?

The other day on the drive home from work I passed a postal drop-box while the postal service employee was picking up mail.

I could tell he was older as all his hair was gray. You have to feel for these postal service employees. This guy probably has enough seniority that he will hopefully be able to make it through the coming severe downsizing of the postal service...but what about all those employees in their 40s, 30s and younger?

The postal service is a monopoly, and all monopolies act the same. They take for granted their privileged place. They provide the agreed-upon lowest standard of product and service and expect that every year their customers will grant them price increases. After all, what choice do we have?

Very soon the U.S. Postal Service will begin the process of severely downsizing and transforming itself. They will have no choice. We all know they are currently losing billions of dollars maintaining a service infrastructure and business model that can process 70% to 80% more first-class mail. And we all know first-class mail volume is going to only shrink.

Going forward, the vast majority of "mail" volume will be advertising mail, including nonprofit mail. Assume that nonprofit postal rates will rise as the nonprofit postal discount is phased out.

The key move in saving the postal service as a business will be the cost-saving transformation of how they distribute the mail. Home, neighborhood, and business delivery will end. Every person, household, and business that wants to receive mail will have to get a Post Office Box, but they won’t be at post offices. Post office buildings will cease being retail outlets. Interestingly enough, this change will set off a bidding war by retailers such as CVS, Walgreen’s and grocery chains to host neighborhood boxes. Retailers will love having postal patrons coming into their stores one or more times a week.

This move alone will quickly turn current postal losses into profits as it will also mean the downsizing of postal employees by half or more.

But what are the implications for nonprofit direct mail fund raisers?

We will address that in our next blog.

Welcome to BIG’s Blog and yes, by all means forward our blog to your friends and co-workers.

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