IS USPS Winning?

For a long time, USPS has been in the news for all the wrong reasons. But over the past holiday season, I had a different (positive) experience than what I expected which I wanted to share. My wife runs an ecommerce business from our home and as part of her business, she ships handmade products all over the country and beyond. Her peak season is around the Indian festival months, September - October and the US holiday season November - December. Most of her mailing is through USPS, because primarily it's cheaper and the post office is closer to home than other mailing stores.

Over the past 2 years, before 2021, the package deliveries through the holiday season, especially October - December, was a hit-or-miss, well mostly miss! USPS would take way longer than estimated time and sometimes the package would be lost or damaged. This caused us and her customers so much angst when we shipped orders. She worked hard day and night to complete orders and ship them quickly, but when items arrived late or damaged, customers would be upset, and all her efforts went down the drain. This resulted in not only bad customer experience but also financial losses to both her and the customers.

But this past holiday season (Nov-Dec 2021), we were in for a pleasant surprise! Fearing that the same issues would persist, we diversified our shipping method by adding another package delivery service to our shipping options, but USPS remained the preferred method. Here are some observations –

• Although USPS increased mail prices across the board, shipping anything less than 1 lb., was still cheaper through USPS than other options
• Shipping anything more than 1 lb. was generally 15-25% cheaper through other parcel service companies, in most cases
• The delivery time estimates for respective service types were about the same on most packages for all companies, but USPS was more reliable with on-time delivery. The other companies almost always delivered it later than promised
• The tracking information was better handled by USPS than competition! This was the most shocking part for me since my experience has always been the opposite
• USPS stopped shipping packages to most international destinations, or increased the price so much that it’s not worth shipping products outside the country, so she started rejecting international orders

I looked at the yearly numbers to see if there are any clues as to how USPS suddenly got better within a year, here are some stats for comparison –

Source:?Annual Report of the Postmaster General.

Although the amount of mail delivered seems to be dropping in last two years, the income generation has increased and so have the expenses. From 2020 to 2021, the only big difference is the increase in income while managing to reduce expenses. In 2020, when USPS was in turmoil, they had a grand plan on cutting expenses drastically, although the reduction is small in 2021, they have managed to increase revenue (still in deficit, -4.8B) and do a better job with mail delivery. So may be the secret sauce is not so much in the numbers but most likely in the administration and operations management.

Bottom-line is that USPS seems to have turned the corner, especially after all the issues they faced during the crucial Nov-Dec time in 2020, with budget shortages, reduced hours of service, low employee morale, scrapping sorting facilities and list goes on. But is this change sustainable and what steps the management will take to keep USPS going? Will USPS win or lose in this chaotic, exploding package delivery business? This will be an interesting topic for B-school case studies in the future.

But for now, my wife, as a small business owner, is thankful that USPS is doing a good job and helping her provide a good customer experience to her buyers! Curious to know if other businesses are feeling the same as well. Feel free to share your thoughts and experiences.

PS: Just before I was about to publish this, President Biden put out the "Free COVID testing kit" program and has tasked the USPS to deliver them to households. Will be a good opportunity for USPS to show that they can handle this challenge of mass deliveries without hiccups. If you haven't ordered your kits yet, go to https://www.covidtests.gov/ or https://usps.com/covidtests to order today.