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Why USPS Cost-Cutting Doesn’t Always Make Sense

As the US Postal Service considers moving more mail delivery to curbside and cluster boxes, a report from the USPS Office of Inspector General (OIG) shows consumers do not like the idea. And such a move could backfire, as consumers are found to be less engaged with advertising mail – a significant source of revenue for the Postal Service – depending on the mode of delivery.

The OIG, working with InfoTrends, surveyed 5,000 households across the country to help determine their engagement with advertising mail. The survey found that among the recipients that did not already have a cluster box, a majority would be displeased if their mail receptacle were changed to a locked cluster box.

Specifically, the survey found most customers (63.3 percent) who currently do not have cluster box delivery say they would be displeased if their delivery was moved to a cluster box, and only 17.2 percent indicate they would be pleased by such a move.

As the OIG notes, deliveries to neighborhood cluster box units are less expensive than curbside deliveries and are substantially less expensive than delivery to the door. “The reason is obvious: carriers can avoid the time and expense of moving through a neighborhood when delivering the mail.”

And that’s why there’s been talk of possibly eliminating door-to-door delivery as Canada Post has recently announced.

“But the move could cut more than costs; it could also cut the effectiveness of ad mail, which provides about $16 billion of revenue annually to the Postal Service,” according to the OIG.

Another report finds that as the USPS closes processing plants to save hundreds of millions of dollars, first class mail delivery is slowing more than the Postal Service projected.

“Preliminary internal data shows that the Postal Service did not meet even its lower targets for first-class mail during the first seven weeks of 2015, with letters that are supposed to take three days (and four or five days if they’re headed to Alaska or Hawaii) arriving on time just 54 percent to 63 percent of the time,” according to the Washington Post.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.