by Jeff Reeves | October 20, 2011 12:03 pm
There’s a lot of fuss about United States Postal Service profitability (or lack thereof) these days. Ideas to streamline the USPS include closing post offices in rural locations, eliminating Saturday mail delivery and other cutbacks.
But cuts aren’t the only way to bridge the budget gap at the USPS. To create more revenue, U.S. postage rates are about to go up — again!
Starting Jan. 22, the price of a first-class stamp will go up a penny, from 44 cents to 45 cents. Postcard stamps will jump more than 10%, from 29 cents to 32 cents.
I’ll concede that it’s impressive what the USPS does for such a tiny price tag. For 45 cents, you can mail pictures of your grandkids or a birthday check from Florida to Alaska with the near certainty the letter will arrive in just a few days. But let’s be realistic — those pictures are now emailed and those checks are now taken care of with online banking.
The reality is that regular Americans rely on the post office far less than they used to. The bulk of mail in America is related to business and marketing — meaning this change in mailing prices is going to impact companies much more than individuals.
There are a host of businesses that will be affected by these post office service changes if they happen — for instance, here’s a list of the businesses that would be hit hardest by a USPS overhaul. But when you consider the fact that service changes are just part of the equation, things look even worse.
Here are three more companies that are going to be particularly hard-hit by the stamp price increase at the USPS.
Netflix (NASDAQ:NFLX) has not had a great year. First, we learned that 1 million Netflix customers defected because of price increases. Then, Netflix CEO Reed Hastings stumbled through an apology but refused to alter his decision — and revealed it would force users to deal with two separate sites instead of one. Finally, NFLX left the rate hike but killed plans to spin off Netflix DVD operations to a separate website. Things are going to be worse in 2012, however, with a first-class mail hike. Hastings said last year that Netflix spent as much as $600 million on DVD postage — nearly 2% of all first-class mail revenue that year!
Stamps.com (NASDAQ:STMP) doesn’t charge any more than the USPS for first-class stamps — it simply charges users for its services, including the convenience of printing stamps on your computer and even customizing your postage with your own images. There is a chance that companies who rely heavily on bulk mailings through Stamps.com will see yet another reason to stop monkeying around with the post office and embrace digital alternatives.
American Greetings (NYSE:AM) has seen a slow and steady decline in revenue as paper greeting cards are becoming less common amid email and Facebook. The prospect of a stamp price hike could mean even more headwinds for a company that has struggled to convince consumers that physical birthday, Valentine’s Day and graduation cards still are worth mailing to loved ones.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.
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