The United States Postal Service is in dire straits. It is projecting a $6.4 billion loss and could run out of money by the end of the month without a Congressional bailout to meet pension requirements.
The driving forces behind the agency’s financial woes are many — a precipitous drop in mail volume because of the digital age, skyrocketing labor costs and an inefficient network populated with infrequently used rural post offices and routes that just don’t make sense financially.
As a result, Postmaster General Patrick Donahoe asked Congress this month to untie his hands so he can make the kind of sweeping changes the organization needs to adjust. On the table are cuts to routes, office closures and even the elimination of Saturday delivery altogether.
Such big changes won’t be noticed by many Americans who do most of their communication and bill-paying via email. But for a handful of businesses, the big changes at the USPS will have a material impact.
Here are five businesses that could suffer from a post office overhaul.
Yes, there are other private shipping companies like UPS (NYSE:UPS) and FedEx (NYSE:FDX) — but it’s hard to imagine either company having anywhere near the convenience and reach of a post office. Whether you live in a remote part of Wyoming or Alaska or Mississippi, there always is a post office nearby that can offer prompt mailing of your knick-knacks to crazed collectors worldwide. If eBay (NASDAQ:EBAY) users have to factor in the added time (and perhaps added expense) of finding a FedEx or UPS outlet, it could slow the flow of Beanie Babies and PayPal money around the eBay auction scene.
Think this is just a conspiracy theory? Wall Street doesn’t think so. EBay stock dropped more than 6% in a single day earlier this month on fears that massive USPS closures would hurt its business. The big merchants and big-city folks will be fine, but small- and medium-sized online sellers are a major trouble spot amid the post office woes.
Allow me to state the obvious about Netflix (NASDAQ:NFLX) — after the dustup caused by the recent dual-pricing model for DVDs and streaming video, and after a rather half-hearted apology to upset subscribers, Netflix isn’t very popular. The stock is off about 50% from highs above $300 just several weeks ago in mid-July.
The newly branded Qwikster arm of Netflix will focus purely on DVDs by mail to eager subscribers looking for a deeper catalog and access to new releases. But one of the biggest complaints about NFLX has been the wait for quality titles. If just one more day is tacked onto shipping, it could create a logistical nightmare for the movie rental company as it struggles to meet growing demand and growing impatience.
Perhaps Netflix should rethink that Qwikster name while it has the chance — because if Saturday delivery is killed or if DVDs don’t move around as quickly as they used to, it’s going to only remind customers of how long they’ve been waiting for The Blind Side.