Postal Service to Netflix: redesign your mailers or face fees
By Darren Murph 
posted Dec 7th 2007 8:40AM
posted Dec 7th 2007 8:40AM
You know those handy mailers that you've been sending back to Netflix for ages as you eagerly await the next few flicks in your queue? Apparently, those buggers have cost the US Postal Service a staggering $41.9 million in additional labor costs over the past two years due to their "nonmachinable nature," and if things aren't changed, it could cost 'em another $61.5 million over the next couple years. In a letter from the Inspector General's office, Netflix is being, um, asked to rework its mailers or face a $0.17 surcharge per envelope, and if such a fee was tacked on, it would reportedly decrease the outfit's monthly operating income per paying subscriber by a whopping 67-percent. Not surprisingly, it sounds as if Netflix will bite the bullet and redesign the problematic mailer if the USPS is serious about the charges, so feel free to keep an eye out for a design change in the not-too-distant future.[Via TechDirt, image courtesy of ABC]
Read - Netflix may see mail surcharge
Read - Inspector General's letter [PDF]
What about Blockbuster? Last time I saw one of their mailers, it didn't appear too different from Netflix. Did they already switch something up?
I wonder if Blockbuster has the volume that Netflix does?
Blockbuster's envelopes are smaller, and have less "flappy" parts.
The Blockbuster envelopes flap(s) aren't nearly as large as Netflix's, and the paper in the envelopes is thicker. I'm a customer of both services and it had previously occurred to how much more difficult the Netflix envelopes are to get through the mail slot, because of the huge flap.
The mailers are non-machineable. Props to the USPS for still getting them to me the next day.
Yeah, Blockbuster's envelopes are about an inch shorter in depth and height. Plus, BB's are firmer because they're glued better. I think overall Blockbuster has a better envelope than Netflix. However, I wish I could say the same about their mailing service. At times they seem to impress me, but then let me down again. But, taking my envelopes to the store and exchange them for movies sort of evens things out for me. So, it's not that horrible.
Blockbuster doesn't have even half the volume that Netflix does.
Nothing was done about this by the USPS for two years?
This is the feds we're talking about where GWBush has instituted a culture of non-action, ignoring laws, disregarding science, etc.
@ Hax
That's hysterical....the Netflix mailers and the Post Office sitting on the arse are all GW's fault!
jiminy christmas...what's next...
The volume has continued going up. Remember, Netflix is the company that everybody constantly predicts is on the verge of doom, then every quarter they blow past expectations. They're to this decade what Apple was to the 1990's.
No doubt the USPS expected their volume to decrease and the problem to take care of itself. (After all, the USPS is *supposed* to deal with non-machinable mail - it's part of their job. So a little bit is built into the budget.) But the opposite has happened.
Also, Netflix has redesigned their envelopes several times. Perhaps it's only the current iteration that's non-machinable.
The USPS has some sort of new internal doctrine that mandates each division must be profitable. I imagine this is somehow related.
Yesterday I read (& then heard) that charities sending books overseas have seen postage increases by over 400%.
I've also seen issues since they now require you to measure packages in a way that never was the case before. I've also had to pay extra because my box was "too light". No kidding.
Yeah, I tried to mail a CD in one of the little square CD envelopes, put full 41 cent postage on it and all that...About 2 weeks later I got it back, a big red stamp desecrating the envelope that read "Exceeds 1/4 inch thickness".
I considered bringing it to the post office and asking to see their measuring tool, because I have never seen a 1/4" thick CD - in fact the entire cd and envelope measured something more like 1/8"...But then I realized if I did that I would be another of those idiot customers making a huge deal over sub-dollar amounts, and that's not who I wanted to be.
No wonder the postal rates are going up... it's all Netflix's fault!
It's time they changed it. Half the time the envelope is already falling apart by the time you get it.
This is kind of off subject, but how about that download service Netflix offers. Is it worth giving a shot? Can you easily stream the movies to your media center pc from another pc?
It works great. I have a fiber optic connection though so I might not be the best test subject. Excellent quality for me though.
I have a 6mbit cable connection and it works great. And to nix the potential confusion, you don't download the movies per se (as in, you can't save them to your hard drive), you watch them on a web player (don't worry, video quality is still pretty damn good). Selection of movies is decent (they advertise 5,000+ movies).
Oh, and one more caveat: according to their FAQ on the subject, they don't support Mac OS or Firefox (read: it requires IE), although you could run IE in Parralels.
It works great, if you want to watch crap movies. My girlfriend and I scoured their library for something good and to this date we've only watched two online movies. I have an HTPC hooked up to the HDMI on my TV and the image and sound quality is on par with DVD (no DTS or advanced surround though).
It'd be awesome if they actually had movies worth watching... but I guess this is probably part of their business model; offer the ability to play movies online, but bottleneck the amount of good movies people can watch a month by only offering the good ones on media that is delivered by mail. Effectively, you would have to keep your netflix account for months to get all the good movies watched. If they offered their whole library online, you could easily knock all those out in a shorter time, shorter time meaning you don't give them as much money.
I agree with Nate - the service itself is really good, but the selection sucks. It's not really the fault of Netflix, it's the movie studios. They all want to support either their own failing download efforts or they don't want to allow downloads/streaming at all.
But if you can find something you like, it's an excellent service. Movies start up immediately and the quality is very good over a broadband connection. "Best" quality is basically like a DVD... though you need a *really* fast connection for that, as the system is very conservative and doesn't really tolerate network hiccups. It's tuned for smooth playback. You also cannot select your own quality level - the system always selects the best quality it thinks you can support. (It's dynamic, though, so it'll re-select if it detects a change in your network.)
"face fees"... am I the only one who misread that as "faeces"?
Dirty minds and all...
You just made me notice that it was actually fees. Hum. That's why I didn't understand the title!
@ Beef Stalmer: I think its time to uncross your eyes! ;)
why not just use an envelope like aol use to use when they use to send out all of those damn cd's
Weight.
I use both Blockbuster and Netflix online and for whatever reason, Blockbuster's packaging seems more sturdy. Also I've only received one broken DVD from BB, many from Net.
By broken do you mean not playable or actually broken. I have gotten 2 not playable from netflix in 2 years. I have 3 at a time and send back 1-2 per week.
I've received unplayable and cracked discs from Netflix more than Blockbuster.
It may also depend on how your local UPS offices/employees treat their mail. I've been a customer of Netflix for many years, and none of my discs have been damaged beyond a few small scratches.
By broken I mean cracked or in pieces.
@ Booticon
You must be the luckiest guy alive. Even when the netflix movies don't arrive broken, which is most of the time, almost all of them look like they were a dog's chew toy at some point.
The USPS has over the last year raised its rates and changed what it considers "standard" mailings, tacking on absurd fees for "oversized" mailers. Its almost as if they don't want people using the USPS system.
Hooray for email!
For those of us who don't use Netflix, you couldn't have provided a picture of the whole mailer so we could see why it's a problem?
(And yes, I do like movies and I like the idea of Netflix, but I don't have time to make enough use of it to make it worth the price, not when Cox, the local cable provider, has a good selection of recent DVD releases available on their On-Demand streaming movie service.)
Nobody is mentioning the money Netflix saves the post office by picking up and delivering their mailers to the USPS distribution centers. By doing so and still paying the rate for first class mailers they are saving the USPS money. In the end I bet it is a wash for the USPS.
I don't know about you, but whenever I've mailed anything via USPS, UPS, DHL, etc, I've always had to pay a certain amount. I assumed that amount was based on studies that those shippers had done and which reflected not only their costs, but a small amount of profit as well. How is it that Netflix has been paying an amount which is less than what the USPS deems necessary? Can I mail a letter for 25 cents? They would never allow me to do that. How many millions of DVD's did Netflix ship before the postal service woke up?
The Engadget story is pretty abridged. If you read the entirety of the article, NetFlix mailers appear to be in compliance with current USPS standards and are intended to be machine process. They were also submitted for testing and approved by the USPS. Unfortunately, the USPS cannot currently process them implying that it is the USPS systems that are not in compliance.
In reading the Inspector General's report, it appears to be even worse. USPS tested the mailers and despite failures in "machinability" gave them a passing grade and approved them for the reduced rate. (Engineering and Marketing appear to have had a little disagreement on what "machinable" means and who gets to make that determination. Any engineers/marketers care to comment? :-) )
The report was a recommendation by the Inspector General that the USPS get its act together, figure out what they can process, rewrite the manual to reflect these enhanced standards, and require retesting. Only after that would it appear likely that a surcharge be applied, and it appears that NetFlix or other concerns would have time in this process to fix their envelopes.
Look up media mail at the USPS website. Even you can mail books, videos, etc... (i.e, media) at a discounted rate.
I am in the process of liquidating my entire DVD collection. I can tell you that the savings one gets with media mail rates does not kick in until you get over a certain weight. Thus, it is less expensive for me to mail a DVD in its case, packaged in a bubble wrap envelope at first class rates than at media mail rates. The savings from media mail kicks in (I THINK the employees at the USPS told me) when the weight goes over 9 OZs. Netflix MUST be getting a discount. I have one of their unopened envelopes here and it weighs .9 OZs.
This is a pretty big oversight on the part of Netflix. Whomever they hired to design their mailers should be forced to redesign it at no cost. I'm a professional designer, and to create a high-volume direct-mail piece that's a) not durable; and b) not machine-sortable by the post office is a big no-no. Somebody clearly did not do their research. Totally inexcusable.
Read the full report. The mailers were in compliance and approved of by the USPS. Then the USPS changed their standards and they are now informing them that with the change, the mailers are out of compliance. Pretty standard stuff really. No one is at fault. Things change.
http://en.wikipedia.org/wiki/Image:Netflixenvelope.jpg
As you might see in the picture, the DVD sleeve slips into the mailer, so roughly a third of that envelope is flappy.
netflix should cut a deal with fedex so they would be exclusive carriers for netflix and forget the usps.
slap a fed ex logo on the nexflix envelope and its a win win.
free advertising for fed ex and faster delivery for netflix.
That wouldn't work. No one but the USPS is allowed to place items in a mailbox. I'm certainly not going to stay home waiting for FedEx.
Don't you suppose that this is, in some way, unconstitutional? Doesn't everyone have a right to use the postal service, at the same rate as everyone else? I don't see the post office giving me a requirement of being 'machinable' on my mortgage payment. What about the contest that Wired used to do where you'd send 'em a weird piece of mail, like a bowling ball with a stamp on it.
So, the USPS could say it's because they're a special case, a corporation, and could argue that Netflix are taking advantage of the system. However, what else are they going to do? Again, the USPS is a federal service, available to all citizens and businesses. Selectively charging certain users more turns it into a private industry, arbitrarily setting rates. Rubbish.
What the heck does the constitution have to do with it? You certainly do have the right to use the mail, but there are wildly different rates depending on what you're sending, and how much of it you send on a regular basis. Just because the most well-known rate is 42 cents an ounce for a letter, doesn't mean that that's the only rate they have. It makes perfect sense that machineable mail should cost less, because it costs the post office less to process it. If a human has to actually decipher a sender's terrible handwriting for their letter to Aunt Tilly, and it only costs 42 cents, why shouldn't pre-barcoded mass volume mail that never even gets looked at cost less?
They have different rates???!!!! No kidding?? See my previous post about media mail. I'm aware of this.
First, I don't believe the post office has different rates for "machineable" vs "non-machineable" mail. They have different classes of mail and rates based on a number of factors.
So let's call the Netflix class Fu class mail. Fu class would have some general specifications, i.e. what they are mailing, how fast they want it there, weight, and size. This doesn't necessarily include the ability to be machineable, rather I would assume that Fu class mail just happens to be machineable the majority of the time, the USPS has banked on that probability and built an infrastructure and sorting system around that.
Now, the USPS isn't saying, "whoa, sorry, you can't ship Fu class" because technically, they meet all of the requirements for Fu class. They're going to charge them more, penalize them, even though they meet the requirements for Fu class. This is selectively charging this one entity more for using the same service (and by service, I don't mean "mail" I mean the specific class of mail) as everyone else.
This tells me it's the system that's broken, and the USPS is taking the easy way out, because they invested too heavily in infrastructure without thinking through their requirements for us as users.
If Netflix meets the legal requirements for the class of mail they are using, they shouldn't be charged more OR made to change. The USPS will instead have to re-write their policy and go through whatever government hoops necessary to make it so.
But certainly, the U.S. Postal Service, of all government entities, would not have done something inefficient or have internal deficiencies, would they? Nah....
Re: Machineable vs. Non-Machineable-
They most certainly do have different rates. Go to http://pe.usps.com/text/dmm100/postage.htm . It says, "Letters are subject to a $0.17 surcharge if they are square, rigid or have certain nonmachinable characteristics."
Actually, the USPS DOES have a different class of mail that is non-machinable, it's called "hand cancel". This doesn't cost more but you have to deliver it personally, and it will still probably end up through a machine if it goes interstate.
The USPS operates differently than most gov't operations. It's governed by gov't but employees are NOT gov't employees. It operates for-profit and is a way of generating income for gov't, just like taxes. It is not just a service that you have an inherent right to. If that was the case it would be free and paid for by tax payers.
This is due to recent Postal Rate/Regulation changes that Netflix ignored. If memory serves, this all changed in early May and no one company should be allowed to operate outside of the new regulations. I had wondered how Netflix was getting away with this. The envelope needs to rigid and not floppy to work on the machines. The rest of industry in the US has adjusted, so should Netflix, Gamefly, etc.
I had read the Netflix envelopes are perfectly machinable when they are sent to consumers, it's the return trip to Netflix that doesn't work in the machines.