Secure Computing: Sec-C

I think that the US Postal Service is finally nearing the end of its death spiral. The USPS recently asked Congress to alter the existing laws: they only want to deliver mail five days a week (instead of six) and they want to increase stamp rates, again.

Online Bill Pay

The postal service has a couple of serious issues. First, they are not generating enough revenue to cover their operations. Postmaster General John Potter estimates that the USPS faces a cumulative loss of $238 billion over 10 years. I don't doubt the numbers -- it's probably in the ballpark.

The second issue is a competitive disadvantage. With nearly all banks and utilities offering online bill pay services (and usually for free), people have realized that they don't need to use stamps. Why should I pay $0.44 a month to pay a bill, when I can pay it for free! I have my cable bill, phone bill, long distance phone bill, cell phone bill, credit card bill, electricity, water, gas, and sewage bills. That's 9 bills per month at $0.44 cents per bill. Paying online saves me $47.52 per year in stamps that I no longer use! Four years ago, I used up a checkbook each year. Last year? I wrote a total of 8 checks. That's an additional savings of $15 per year since I no longer have to order replacement checks!

In addition to the dwindling number of bill payments sent through the post office, there is also the dwindling number of personal letters. Email, cell phones, SMS/texting, blogs, twitter, and other social media services have effectively made personal letters obsolete. The only time I really see personal letters anymore are when they are accompanied by birthday and holiday greeting cards.

How can the USPS compete against on-time bill payment services and personal communications that are near real-time and effectively free? They can't.

Spreading Out

Most companies learned long ago that vertical markets are limited. It is too easy for a competitor to cut off your customer base. With the postal service, they first faced competition from professional package delivery companies like UPS and FedEx. Then they met the Internet, which effectively made most USPS services obsolete.

The USPS has tried a couple of ways to enter other markets. They came up with home-stamp printers, so you don't need to buy stamps at the post office. I only know two small companies that bought these, and they stopped using them because the ink was too expensive. And while the idea of creating custom stamp pictures was cute, I haven't seem them used with the exception of one wedding invitation. Frankly, the price of $5-$10 over the cost of the stamps was just too expensive.

Not all of the USPS ideas have been bad ones. For example, they offer flat-rate packaging. Regardless of the item (up to 70 lbs), if you can fit it into their 12.5"x9.5" envelope then you will pay $4.90. They also have small, medium, and large flat-rate boxes. These are ideal for those eBay packages, or for shipping off computer supplies! The prices are very competitive compared to UPS and FedEx.

Thinking Small

Unfortunately, the USPS has been unable to think beyond "mail delivery". For example, ten years ago they proposed an offering to forward your postal mail to your email address. Uh, why? Why pay for a conversion service when I can just ask the sender to email it directly? And more importantly, who will be typing in the letter? I don't want anyone else to read my mail!

As with any industry, there are only three ways to increase revenue: create more offerings, increase prices, or decrease costs. The USPS has clearly failed to create more offerings. The services that they currently offer are, for the most, not competitive. (We don't call it "snail mail" for nothing!) Thus, they only have two other options.

Last year, the USPS suggested reducing mail delivery from six days a week to five. They just brought up the idea again. I can see the pros and cons to this. On one hand, most businesses shut down over the weekend. There is no real reason to deliver mail on Saturday to companies that are not open. And I don't think most residences will really care if no mail is delivered on Saturdays. As with banks, you can still do transactions over the weekend (mail letters), but the transaction will no complete until the weekday.

On the other hand, 5-day-delivery puts the USPS at a serious disadvantage. Both FedEx and UPS have Saturday delivery options. If it absolutely needs to be there, then the USPS goes from a weak option to no option.

Finally, there is the option to increase prices. The USPS began seriously increasing prices in the early 1970s, and the practice has since become a run-away process. Each of the last four years has seen a price increase.


Why are the early 1970s important? That's when the USPS went from a government-run organization to a semi-independent corporation. So the USPS went corporate and began increasing stamp prices. At the same time, they failed to address the growing threat from the Internet. Every time they increase stamp prices, they reduce the number of people sending letters and force more people to use online services that do not use the USPS.

Thinking Outside the (Flat-Rate) Box

It still isn't too late for the USPS to recover from this massive loss. But they need to think differently. For example:

• Free Services. Every FedEx and UPS package includes a tacking number. In contrast, the USPS charges extra for tracking. They need to provide free tracking in order to remain competitive. I want the option to mail an untracked letter, but I also want the option to track letters for free. That blurry stamp with an unreadable postmark is no longer a viable option. I want to go to usps.com and get a tracking number, write it on my envelope, and mail the letter! I want to see that it was picked up at 9:45am and delivered four days later.
  
  
• Simplify Services. If I want to send a letter, I need to write the address on the letter. If I want it insured, then I need to fill out a form. If I want it certified, then I need to fill out another form. Compare this with UPS and FedEx: one form and check what you want. Why is the line at the post office so long? Customers are constantly filling out additional forms! The USPS needs to simplify this process. Simplification will lead to faster service, happier customers, and less cost overhead.
  
  
• Usability! My local post office has four teller windows (of which, only 1 or 2 are usually staffed at any given time, leading to long lines) and two automated package mailing systems. The two automated systems are virtually unused. One automated system may have one customer at it, while the human tellers will have a line of 30 or more customers. This is a massive waste of a good opportunity.
  
  
• Additional services! The USPS needs to branch out! Offering a PO Box address is great! How about a service to email me when the mail has been delivered to my box? Maybe even an email about any packages that arrive or when the PO Box is overflowing? I want to be able to set an alert, so anything from California or Amazon immediately generates a notification to me! And why can't the USPS sign for my UPS or FedEx packages? I'd rather have the packages sit in the post office than in plain sight on my front porch.
  
  
• More locations! If I want to mail a package, then I need to go to the post office. (Assuming I cannot weigh it myself, compute the postage amount, and fit it into my tiny out-going mailbox.) The USPS only has five post offices in Fort Collins. In contrast, FedEx and UPS have lots of locations where I can ship packages. Besides the official FedEx and UPS buildings, I can go to MailBoxes Etc, Postal Plus, Kinkos, and even the grocery store! Most big companies have scheduled FedEx/UPS pickups, and I can even call them up and schedule a pickup. My time costs money. I'm willing to pay a little more for the convenience factor. (If I earn $60/hr, then a 30-minute wait in line at the post office costs $30. I can ship a huge package via FedEx and have them pick it up for less.)

In effect, the USPS needs to give me a reason to want to use their services. Without a new reason, they cannot compete against UPS, FedEx, and the Internet. If they don't change their ways, then snail mail will become obsolete.

The Down Side

So let's say that the USPS goes out of business. (From 6-day delivery to 5-day, to 3-day, to none.) What's the problem with that? Well, here's just a few issues:

• Anonymity. You cannot mail a letter anonymously through FedEx or UPS. Sure, you can put down a fake sender address, but that isn't the same as leaving it blank. Got a hot tip for the police? Want to complain about your boss? Need to mail a ransom letter? The USPS is your best option for anonymity.
  
  
• Slow Down. Sometimes you don't want next-day delivery. Mailing home stuff you collected at a conference or bought on a trip? You don't want it to arrive before you do. Want to float a check so it gets delivered the day after you get paid? The USPS is a great option if you do not want it to arrive immediately. While some auto-pay systems do allow you to schedule the delivery date, you usually cannot schedule a payment when you have insufficient funds. And FedEx and UPS don't have an option to "deliver it next month". (For next-month delivery, use USPS bulk/book rate.)
  
  
• Hold mail. Going away on a trip? I really like the "hold my mail" yellow forms. I only wish that there was a way to tell FedEx and UPS to hold delivery until next Tuesday.
  
  
• No Internet. The best advantage for the USPS is that I don't need Internet access. If they go away, then there is no good option for paying bills without an online bill-pay service. If, like my grandmother, you don't have Internet access, then you lose the ability to pay bills and contact relatives. Requiring online access places more power into the hands of the telcos. As long as there is a non-Internet option, the telcos must remain competitive. Remove the non-Internet option and Internet providers become a necessity -- watch them increase their rates.

While the USPS does have unique offerings, their management seems hyper-focused on the vertical delivery market. If they want to survive, then they need to offer more services and lower their costs -- not cut services and increase prices.