When the Post Office Had to Compete
Greg is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Have you ever wondered what would happen if the U.S. Postal Service was forced to compete with non-governmental companies for its business? We’ve already seen the boat-rocking that the rise of UPS (NYSE: UPS), FedEx (NYSE: FDX), and other parcel delivery services has caused. But what if companies started offering mail delivery that was more efficient, safer, and—most importantly—less expensive?
Well, you’d probably stop paying eight dollars for a book of stamps every so often, opting for the cheaper ones instead. You’d worry a lot less about lost mail, knowing that whatever service you were using would risk losing your business if they ticked you off. You’d never stand in a post office line again, that’s for sure. But why fantasize? All we need to do to learn what this scenario would be like is to look back at the time in American history when the U.S. Postal Service met stiff competition from private mail companies.
In 1843, the cost for mailing a standard one-page letter was 14.5 cents. To save you the adjusting trouble, in modern terms that evens out to VERY EXPENSIVE. People got tired of the fact that a shipping company could send a heavy barrel of goods to another city for less money than it cost to send a single letter. So tired that they started asking complete strangers at the train station to carry a letter to its destination and leave it at the local post office for them.
Among other companies, a little business run by Henry Wells began offering local mail delivery in New York state at prices five times cheaper than the local government service. Guess what happened? People loved it. Wells went on to make a fortune, and the company he later founded, Wells Fargo, still bears a delivery stagecoach as its symbol.
Public competition with the U.S. Postal Service eventually died out, strangled by government opposition and also by confusion over whether the Constitution’s mandate to the government to establish a postal system was exclusive or not. But not before the experiment had forced the Postal Service to adopt more efficient techniques in order to compete. For one thing, they adopted those other companies’ habit of selling little stickers that went in the corner of an envelope as proof of payment.
Will UPS ever start offering daily door-to-door mail delivery service? There’s one huge difference in the situation today when compared with that of 1843. Back then, people went to the post office to pick up their own mail. Adding a second fleet of trucks to the roads today doesn’t seem like a great idea, for many reasons. But what about going back to the pickup system? We’re out driving around all day anyway; why not stop at a convenient branch and pick up our own mail sometimes? If they offer stamps for five cents apiece, like Henry Wells did, we just might go for it. And if they promise to apologize for losing my mail? Sign me up.
UPS and FedEx are enjoying lots of business from customers frustrated with the current Postal Service system, just as they were back in 1843. For customers shipping packages, the post office has already become the option they choose when their shipment isn't that important. The 2 leading shipping companies offer far more tracking capability and guaranteed arrival time, and they actually care about keeping your business. And keep in mind one other critical factor: With the rise of email and paperless billing, isn't it only a matter of time until the only material showing up in our mailboxes is unwanted junk mail? There must be a day coming when customers will abandon the mail altogether and ship through one of the competing companies.
There’s an opportunity here…now is the time to choose sides. Put your money behind the company that you think will be positioned to take advantage of the Postal Service's demise, because it can't be far away!
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