Opening the mailbox

At yesterday's MTAC meeting, a mailer asked if mailers could have access to the mailbox for delivering periodicals, newspapers, and advertising on Saturday if the Postal Service stopped delivering on that day. While the hypothetical question was dismissed, it illustrates the risks that reducing delivering on that day could have for the Postal Service. Currently, access to the mailbox is restricted but reductions in the service that the Postal Service offers could create real demand for access that was just theoretical in the past.

The Postal Regulatory Commission's report on Universal Service dealt with the question of mailbox access in its report on Universal Service. However, it did not deal with the question of mailbox access if the Postal Service no longer used the mailbox on a particular day or at all.

Mailbox access is one of the most contentious issues in postal policy as it raises issues of privacy and the security of the mail. Mailbox access is generally not an issue at business addresses, as those addresses have doors that can accept delivery without violating the Postal monopoly on the mailbox. Mailbox access also creates a situation that UPS, FedEx, and newspapers have to either drop off their items on the stoop or set up their own box for their own items. Cluster boxes and post office boxes create a different issue as they are not attached to the residence of business and have more characteristics of a privately provided delivery point.

To date, the Postal Service has completed a significant amount of planning regarding operational changes and the impact on the workforce. It has just begun the process to understand how the change would affect senders of mail and total Postal revenue. The Postal Service is just now conducting the market research necessary to determine the impact of the change on senders of mail and their spending on Postal products. Once this research is complete, the Postal Service should know what is the market for Saturday delivery and more broadly what is the market for postal operations on Saturday.

In listening to the challenges that the Postal Service has in dealing with the proposed change to 5-day service, and mailer questions about how the change would affect them, three distinct groups of customers seem to be affected.

• Customers who use retail services on Saturday - Postal retail services like all other retail services serve customers on Saturday whose work or school schedule prevent using the service during business hours between Monday and Friday. This includes people who want to pick up parcels that could not be signed for during the regular delivery schedule, and those who need to tender mail and parcels. An important user of retail services on Saturday are larger billers who use caller service or Post Office boxes to receive remittances and losing a day of delivery slows down the process of depositing payments and increases the cost of using the mail for billing and payments.
  
  
• Customers who require Saturday delivery - As the question illustrated, Saturday delivery is important to senders of daily and weekly periodicals, and advertisements. Saturday delivery is a direct competitor with advertising placed in the Sunday paper. As newspaper circulation declines, many newspapers use mail deliveries to serve those addresses that do not receive the paper, the advertisement would have to be delivered either on Friday or Monday and it is not clear that the advertisement would be as effective on a day when customers have less time to look at what they receive. Loss of Saturday delivery will have the greatest impact on advertisers in those areas of the country where newspaper circulation has the least coverage of all households. Loss of Saturday delivery would also impact political campaigns that try to have the last critical mailing arrive on the Saturday before the election to coordinate with other media.
  
  Saturday delivery is also important for senders of bills. Bill senders have a printing cycle set to a 6-day delivery time. When the bill arrives has an impact on when the bill is paid. Changing the delivery schedule will affect when the company receives the money they are due. Saturday delivery is also important for billers when they accept the payments. As most large billers pick up their mail at the Post Office, the Postal Service will continue this service.
  
  
• Customers who require Saturday Processing - Saturday processing affects mailers with strict delivery requirements on Monday or Tuesday of the following week. Saturday processing also affects billers as it affects the speed at which bills are processed and therefore received. While allowing billers to collect payments on Saturday allows them to quickly deposit payments that have arrived at the local office, it slows the arrival of bills that are elsewhere in the system.
  
  Eliminating Saturday processing affects small business and individual mailers in two ways. For bills, it would require them to mail earlier to ensure that bills arrive on time. For parcel shippers, it eliminates the advantage that the Postal Service has over its private sector competitors for orders shipped late in the week and on Saturday.
  
  Finally, eliminating Saturday processing affects the delivery of fresh produce, live plants and animals. Losing a processing day increases the chance that the produce, plant or animal will not arrive as the sender intended. Creating significant problems for the small group of senders whom the Postal Service serves in this market.
  

While the market research that the Postal Service does now will be helpful, it will not likely describe the full impact of the change. If the Postal Service changes to 5-day a week delivery, every local and national television news program, radio station, and newspaper will be covering the change as a top story for an extended period. Stories will be presented on alternatives to mail to pay bills and ship parcels. Awareness of alternatives and their advantages will increase substantially and the relative impression of the Postal Service's products compared to electronic and physical delivery alternatives will be diminished.

The massive free media on the switch to 5-day delivery will complicate the Postal Service's marketing challenges. The Postal Service will have to deal with increased marketing pressure from electronic and physical delivery alternatives as well as local newspapers. This marketing effort will highlight why their service is now a better deal than the Postal Service.

Banks and others sending bills and receiving payments will use the change to highlight the advantages of electronic bill presentment and payment. Some will introduce or increase fees for hard copy bills and increase incentives for electronic payment, knowing the free media will reduce the size of the fee change or incentive offered to cause a customer switch delivery mode. Weekly newsletters and periodicals with Friday or Saturday deadlines will also expand their effort to move their customers to electronic delivery, again using the free media to reinforce this effort.

Countering this effort will be expensive and difficult. The Postal Service's marketing effort will need to be as detailed as its operating plan and in addition to advertising would require that every available person with some sales or marketing responsibility contact customers in person in order to retain their business. With millions of customers, large and small affected by the change, the success of the transition requires that the high-touch business retention effort that is required succeeds.