Postal Service to Netflix: redesign your mailers or face fees
By Darren Murph 
posted December 7th 2007 8:40AM
posted December 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]
I'll go one step further than Wes. This is a completely misleading article, and a non-issue for disc mailers.
According to the report, currently disc mailers in general meet the requirements for a mailed package.
The story is that the USPS is trying to figure out how to address a 0.77% by volume issue that could save ~$60MM annually. That MAY impact the envelopes received in the future, but right now, unless the requirements are changed, disc mailers are in compliance, and the management of the USPS has no grounds by which to charge these companies more money.
This is a VERY interesting case study however in how changing business models impact requirements. Were I Netflix - I would proactively contact the USPS, ask what they could do, and then work that good will into preferential pricing for the discs they mail. After all, it does strike me that they are the 800-lb gorilla in this issue.
Change is good :)
If I remember correctly, way back in the day (like in 2000 or so when I was in college and had ample time to watch movies), they used to have envelopes made of bubble wrap, then at some point they switched to paper. Am I remembering that right?
Bubble wrap envelopes are $$$$$$$$
Several years ago, they went through several versions of envelope styles before sticking with the current one. There was one that was stiffer and padded. Probably very costly.
I was lucky enough to see their brand new mailer design, check it out:
http://i8.tinypic.com/7xjp8w3.jpg
They must have paid some like $20 million.
That's the one we have now.... ??????????????????
It's a joke.
Am I the only one that sides with Netflix here? They change their standards and then immediately expect a company who spent millions developing a system around those mailers to change. And shouldn't the USPS aim to break even, not make a profit. It's pretty nice when you have a government granted monopoly on first class mail. My stamp prices keep going up yet the postal service continues to increase their profit margins.
By law, the USPS is required to break even. When the rates go up, they show a profit for a year or two. Then labor, fuel, and inflation in general make them break even. Then for a year or two they lose money, finally prompting another rate increase. Over the 5 years, however, it's a wash.
The machines sorting this mail are facinating to any geek. A Delivery Bar Code Sorter will read 40,000 pieces of mail an hour, sorting it to 220 different bins. Dual pentium 3.2g cpu, mail shooting along at 20 mpg, clickity clack. Cool!
Handwriting recognition is over 95%, too. BIG racks of cpu's crunching that data
Actually the USPS operates for profit. Look at this way...if they didn't we'd have to pay more in other taxes for gov't programs like welfare or war.
That's what I'm talking about! "let's run USPS like a buisiness, but when we suck and need more money, let's go for...um..YOU, NETFLIX! Charge your customers more money for a great service so we can pay for our archaic Union workers! Thanks. Would you like some KY with that?"
Exactly the point I'm trying to make. Thanks.
Is this not further proof that video rental via the mail is from the stone-age? What year is it? Can someone please start telling people how easy it is to hook a cheap PC with a good video card into a television. Especially how easy it is to hook them into new televisions. Even if you don't use the Mediacenter interface, you can purchase and rent from many places like Amazon. If people are going to browse the web for the movies they want, they may as well go the next step and just use the computer as the delivery. Q.
Have you tried that on a 50+" plasma. I have and, well not so good. Plus my Panasonic 50" plasma is NOT to be plugged in to a PC. Read up on it, it's not all that simple.
Agreed. I have my Mac Mini attached to my Sharp LCD and it works a charm.
However, I still prefer renting BluRays through the mail to watching overcompressed downloadable content.
You bought a plasma and you wait for movies in the mail...I guess I am not getting thru my point...as usual...Q
what about Gamefly's envelopes?
@Hax, Dec 7th 2007 9:53AM:
Yea, its all GW's fault. Why not? I mean, its this current generation's DEFAULT to blame everyone else, isnt it? Not one of these idiots at the USPS is to take fault, themselves - it rolls right up to the very top.
Following your logic, we should blame this current generation's laziness and stupidity directly on their parents. Or maybe Clinton? I mean, he's the one who was President who showed that generation that lying, cheating, stealing are perfectly OK to use to get ahead. Otherwise, where else did 40% of this current generation get that notion from?
Go back to sleep Hax.
How hard is it to understand that as the USPS upgrades its automated equipment that it will most likely have to change it's regulations? As volume goes up it is continually refining its processes of sorting, routing, and delivering mail.
Also, I'm surprised nobody has considered the comments that this will impact Netflix's operating budget...you don't think they would just pass this on to the consumer?
I have Netflix for over two years now and up to this point have been extremely impressed with both them and the US postal service. In a sea of junk mail, bills and other crap... those little red envelopes are the only thing that bring a smile to my face. I have only ever recieved two damaged DVD's despite getting a lot of movies (I have 3 at time plan). I live in NY and if I mail the DVD today I get an email tomorrow of them recieving it and then get a new movie the following day... brilliant job. I worry about the environmental impact the Post office will have if Netflix sends out more sturdy envelopes it will mean wasting more trees... not to mention increased strain on the Postmans back.. they should create machines that can handle this environmentally friendly approach to mailing rather than insisting on heavier envelopes... and driving to the blockbuster store is not an environmental solution either!
At first glance, I thought it said "Inspector Gadget"
the cost of oil affects everything...
Heaven forbid anybody at the post office should actually have to work for their paycheck
That's right! Let that 202 BILLION pieces of mail deliver itself next year! Who needs the USPS?
I spoke with my local Postmaster and she said that companies that do a lot of business with the USPS get a discount.
Oh yea, Hax, you are an idiot.
The USPS is in the business of making money, and they're taking advantage of Netflix's dependency on the USPS to ask for more money. Simple as that. Another government racket.
It's almost like Netflix is operating at the mercy of the USPS, when you'd think the USPS would be glad to have a client of the volume of Netflix and would just retool their machines.
As for me, I'm just glad to have a piece of mail I look forward to for once. For a couple of years there my mail box was this just this place I'd have to clean the garbage out of every once in a while.
Does anyone know the purpose of the "flappy" part? I've often wondered why the envelope isn't the same size as the inner sleeve, seems to be a waste and gets in the way.
LaLa.com just dealt with this by providing thin cardboard sleeves that hold the discs inside of their sleeves.