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Declines in Postal Service Mail Volume Vary Widely Across the U.S.

April 30, 2015 Comments off

Declines in Postal Service Mail Volume Vary Widely Across the U.S.
Source: U.S. Postal Service, Office of Inspector General

Declining First-Class Mail (FCM) volumes pose a major financial challenge to the U.S. Postal Service because FCM contributes by far the largest proportion of revenue to the Postal Service’s bottom line. Between fiscal years 1995 and 2013, FCM single-piece volume dropped by 61 percent. But a close analysis of the decrease reveals significant variations in this decline by geographic area. In some areas, for instance, the percent of volume lost was even greater than 61 percent, but in other areas, it was almost zero. Additionally, the rate of decline is slowing or has stopped even in many of the areas that have lost the most mail volume, suggesting a new base level of demand for FCM has been reached in those regions.

As the Postal Service plans for its future, it must keep in mind that the needs of its customers vary at least as widely as these differences in mail volumes. Because there is no average mail customer, strategic planning designed around average mail volume data will inevitably result in inefficient solutions. The Postal Service would benefit by examining the widely varying levels of demand for FCM and using that information to develop its operational and customer service plans.

USPS OIG — Domestic Merchandise Returns and Forwarding

April 24, 2015 Comments off

Domestic Merchandise Returns and Forwarding (PDF)
Source: U.S. Postal Service, Office of Inspector General

The package delivery market is an important and growing segment of the U.S. economy. American businesses and consumers spent more than $68 billion in 2013 to ship packages domestically. As part of this package activity, merchandise sometimes needs to be returned to the merchant or forwarded to a different address designated by the recipient. A recent study conducted from April to June 2013 showed that just over 5 percent of business volume (over 500 million pieces) was returned using a carrier shipping service. The domestic returns business is worth an estimated $3 billion annually and is expected to approach $4 billion by 2016.

The U.S. Postal Service is active in the returns market, having generated about [redacted] in returns-related revenue in fiscal year (FY) 2014. The potential of this market was recently acknowledged when the vice president, New Products and Innovation, stated, “Returns play an important role in our efforts to grow our package business.” The Postal Service has also released its new “Already There” advertising campaign aimed at promoting the ease of its return services. In addition, the Postal Service generated about [redacted] in forwarding-related revenue in FY 2014. To support this growing market, the Postal Service offers a variety of merchandise return and forwarding products and services and continues to develop additional services to keep up with eCommerce, digital innovations, and changing customer preferences.

The objective of our review was to identify opportunities for the Postal Service to grow its merchandise returns and forwarding revenue. To that end, we researched global trends, reviewed actions of foreign posts, met with Postal Service managers and returns companies, and examined prior U.S. Postal Service Office of Inspector General reports.

Postal Service Revenue: Is the Glass Half Empty or Half Full?

April 16, 2015 Comments off

Postal Service Revenue: Is the Glass Half Empty or Half Full?
Source: U.S. Post Office, Office of Inspector General

We have all read the negative headlines of U.S. Postal Service’s looming financial demise. However, in its new paper, U.S. Postal Service Revenue: Is the Glass Half Empty or Half Full?, the OIG finds that the Postal Service may be turning a corner. An increase in parcel volume, significant cost reductions, and the exigent price increase are collectively driving an improvement in the Postal Service’s financial health.

Nevertheless, the Postal Service still faces numerous challenges, including the continued and persistent decline in First-Class Mail volume, an ever-increasing number of delivery points, and an increased need to make investments for its future. While significant, these challenges are not insurmountable. In order to further improve its financial position, the Postal Service will need to focus on increasing the revenue yield of its traditional products wherever market forces and conditions allow, including taking advantage of the growing parcel market. In addition, the Postal Service would benefit from diversifying into other areas of business, especially logistics and financial services.

Four in 10 Americans Look Forward to Checking Mail

April 7, 2015 Comments off

Four in 10 Americans Look Forward to Checking Mail
Source: Gallup

In a world of email, texts and social media, 41% of Americans nevertheless look forward to checking what is in their mailbox each day. Americans 65 and older are more likely than younger adults to enjoy checking the mail, but 36% of Americans under 30 also feel this way.

USPS OIG — Issue Brief: Letter Carriers: Modern Day Milkmen?

March 9, 2015 Comments off

Issue Brief: Letter Carriers: Modern Day Milkmen?
Source: U.S. Postal Service, Office of Inspector General

Highlights

  • The Postal Service and AmazonFresh are jointly experimenting with grocery delivery — a market set to grow in the near future.
  • Because of its extensive fleet, last mile advantage, and reputation for reliability, the Postal Service could be well-placed to play a key role in this space.
  • There may be opportunities to collaborate with other retailers and producers, create an online shopping mall, or capture different areas of the value chain.
  • The Postal Service needs to continue to experiment now with different strategies if it wants to be an effective player in this growing market, as the number of new entrants is quickly growing.

USPS OIG — What Postal Services Do People Value the Most? A Quantitative Survey of the Postal Universal Service Obligation

February 24, 2015 Comments off

What Postal Services Do People Value the Most? A Quantitative Survey of the Postal Universal Service Obligation
Source: U.S. Postal Service, Office of Inspector General

The OIG has conducted a nationally representative quantitative survey on the relative value of some key services provided as part of the universal service obligation (USO). This study is the first of its kind in the United States and was done in conjunction with the market research firm Gallup and Professor Michael Bradley of George Washington University’s Department of Economics. The study, What Postal Services Do People Value the Most?, focused on four attributes of the USO: mode of delivery, access to postal services, frequency of delivery, and price. This study is a follow-up to our white paper Guiding Principles for a New Universal Service Obligation in which we discuss the need for such a study.

The survey found that both consumers and businesses still value postal services, especially door and/or curb delivery instead of delivery to a cluster box or parcel locker. Respondents also value the ability to access postal services through post offices, rather than using other alternatives such as postal counters in non-postal retail stores and self-service kiosks. In addition, while consumers and businesses are indifferent when it comes to the Saturday delivery of letters, consumers still place value on the Saturday delivery of parcels. Furthermore, consumers and businesses also value lower prices and may be willing to accept lower levels of service to keep prices from rising sharply.

USPS OIG — Window Retail Customer Service: Audit Report

February 12, 2015 Comments off

Window Retail Customer Service: Audit Report (PDF)
Source: U.S. Postal Service, Office of Inspector General

Between FYs 2012 and 2013, an increasing number of customers expressed dissatisfaction with the service they receive at retail facilities. While the Postal Service’s goal is 90 percent customer satisfaction, in FY 2013 more than 20 percent of customers who responded to surveys stated they had been treated “worse than other retailers” at Postal Service retail counters.

Dissatisfied customers exist, in part, because procedures for improving customer service are not functioning as intended. Although management communicates with sales associates periodically via service briefings known as “stand-up” talks and provides video instructions, there is a lack of continual, formal customer service training. Further, sales associates are selected based on seniority rules, rather than suitability for the position, as suggested by best practices. In addition, the Postal Service does not have a mandatory process to ensure managers regularly observe sales associates and provide feedback. Regular observation would help sales associates recognize where they need to improve their performance.

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