Mental Excercise: Replace the US Postal Service

Yesterday, NPR discussed the challenges of the US Postal Service after reporting a $3.8 billion revenue loss for the fiscal year ending September 30, 2009.

The revenue loss corresponded to a reported 13% decline in mail volume.

I’ve noticed a significant decrease on my end since Dec 2007 as well. For the 2008 and 2009 – the number of credit card offers and direct mail catalogs arriving daily was 0. This number is only now picking back up – maybe one per week. Nowhere near the multiple items per day we received in 2006 and 2007.

We’re even transporting Netflix DVDs less.

I have a hard-time imaging the USPS returning to profitability with first class stamps less than 50 cents a piece. Then again, none of the bulk mailings I mentioned above had first class stamps on them. So, either first class stamps are the USPS’s only profit – or they’re a loss leader.

My bet is the latter.

This puts the Postal Service in a tough spot. FedEx and UPS are taking the high end of their business. Email, Facebook, and 37Signals are taking the low end.

There are a few things we send via the USPS – things that aren’t easily digitized and not urgent enough to send via a private carrier:

  1. ‘Thank you’ notes from the kids.
  2. Holiday cards.

Leads me to some interesting questions:

Who else could handle that exchange?

What would a non-profit competitor to the USPS look like?
Even one that didn’t sell first class stamps or provide service to every address.

Or, restating the questions –

What would US Postal Service look like if it started today – with FedEx and the internet already well-established ?

Three ideas that immediately come to mind:

  1. More sub-stations within other existing businesses.
  2. Email/IM/voice mail notification of letter/package arrival.
  3. Scheduled home pick-up.
  4. Co-op business structure.

How would you change the USPS?

You should get my email