RSSNetflix envelopes anger Postmaster, Postal Service balks
By Tim Conneally | Published December 10, 2007, 11:09 AM
The US Postmaster General issued a report to the Postal Service recommending it either change its First Class mailing standards to disallow Netflix mailers, or start charging the company a 17 cent handling fee per envelope.
Apparently the two-way Netflix mailers were brought up in audit because approximately 70 percent of them have to be processed by hand. Automatic processing was found to damage either the DVDs or the sorting equipment, and the design of the envelope was reported to cause obscured return addresses and missorts.
Because Netflix mail traffic is so high (shipping an average 1.6 million DVDs daily,) the Postal Service incurred an estimated additional labor cost of $41.9 million in the last 2 years, and a forecasted $61.5 million over the next two years if trends continue.
Data presented in the Inspector General's report was accumulated over a two year period, explaining in great detail how the envelopes' "floppy leading edge" is the main perpetrator in mechanical sorting failures.
It appears that the company has eluded service charges and rate increases thus far because of procedural loopholes.
In 2002, the Postal Service Marketing Preparations and Standards group notified the company that its Mailers were automation-compatible, despite being found incompatible by Engineering two weeks prior.
Furthermore, the mailers currently adhere to the Domestic Mail Manual (DMM) machinable mail criteria, and the Postmaster General has indicated that the Nonmachinable criteria should be changed to include language to discourage this "floppy leading edge" business, but the Postal Service has yet to change anything.
While Blockbuster Online, GameFly, and Simply Audiobooks were all named in the report, Netflix is the "one DVD rental company" anonymously referenced the most in the report. They have yet to be legally confronted by the USPS on this matter, so DVDs continue to clog sorting machines across the country.
http://directmag.com/news/netflix-111906/
I think that it is no coincidence that former U.S. Postmaster General William J. Henderson was chief operations officer for Netflix.
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Wow....let's see. The USPS is getting $240 million from netflix over that same period. That $200 million incremental profit...Hmmm think i might get in the mail delivery game i think even half that would be acceptable to me.
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I have to agree on this. It would serve them right if the USPS stopped processing any mail for netflix at all unless they take the measure of upgrading their shipping material. a measure that could be addressed easily IF they opted for a proper Media mail envelope. the reason they do not? the dimension of a proper shipping unit is a few cents more for postage...
So Lets have the USPS block them from service unless and until they comply with a good enough standard. Sure would be nice to get a disc in the mail that is not near destruction of a change...
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annnd up goes the price of stamps, again. $1.15 for first class, anyone?
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Meh, add the $0.17. Hardly a punch in the wallet, and if it saves $42 million and a lot of congestion, then I think iti s a no brainer.
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It is worth noting that these are not $25 movies they are 25 cent plastic and foil discs. The prepaid business reply postage is more than 1st class and more than the value of the disc.
There is something bizarre and dysfunctional about spending a dollar to mail a quarter back and forth.
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I think the MPAA might have some argument with this logic. They are indeed $25 movies that happen to be carried on 25 cent discs. It's the content that's important, not the delivery. With that in mind, I look forward to the day when all of this disc nonsense is exactly that - nonsense. A day when all movies will be downloadable in high definition. Without DRM. Yeah. Right.
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SM 'indirectly' makes some valid points, though the analogy given would invalidate most letter mail-- how much to ship back and forth a leaf of paper worth a tiny fraction of a penny? (Thus proving LL correct re the value of the content, not the instrument delivering it.)
Would it make any sense for Netflix to just tell customers to junk the disc? Or are a couple of the main reasons
1. prevent excessive copying / cannibalizing of future sales...
2. increased sales: getting folks into the habit of getting more stuff more often with such a cycle...
Don't know why Netflix either hasn't partnered for or self-developed mechanisms to deliver over the web-- say a combo background p2p downloader & burner-- could be set to work while sleeping / watching other movies. Would have to be 'very' seamless and it would be a real killer with some remote function to control & access from other pc's, cell phones, etc.
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Hey MikeTechno,
Even easier math. Have the postal service fix the machines to handle the mail that is sent per the postal service guidelines!..
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Hmmmm. Looks like the choices are either:
A. Continue to waste the postal service's money, (inevitably leading to more rate hikes).
B. Charge the companies responsible for wasting the money.
C. Upgrade hundreds or thousands of mail processing machines across the country.
D. Change the postal service mailing guidelines.
Funny, I don't see how C is the best option there.... Do you want to pay for that?
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E: do away with the post office like Western Union did away with telegrams!
Too many electronics today allowing us to be eCommerce. Can't tell you how many times a month USPS has gone out of its way to lose, destroy, mangle, delv late some form of mail that I cant control how it is sent.
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Exactly! My new MP3 Player is on its way to Georgia... when I live in Texas.. It shipped out of Texas originally... between Buy.com and USPS... I'll never get my player... :(
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This one is very easy math. The Post Office should just simply disallows all NetFlix shipments immdiately until they fix the problem(effectively putting NexFlix out of business instantly) and THEN watch how fast they fix the problem. This is a paper envelope with a floppy end here....that's all. This simple "problem" would take NetFlix all of about ten whole seconds to fix if they really wanted to. Well....make them "really want to" by essentially putting them out of business I say.
Let's keep one simple fact in mind here: NetFlix needs the Postal Service. The Postal Service doesn't need NetFlix.
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Relax buddy! I'm sure they will fix the problem, no need for drastic measurements here.
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Boohoo...It sounds to me that Netflix has met the postoffice's standards as outlined in the DMM. The Postmaster really should be working with Netflix to solve the issue instead of b****ing about it. I'm sure Netflix wants their mailings to be timely to satisfy customer experience. I really don't see Netflix (or any company) not wanting to work successfully with it's partners.
'Domiants' post says it all..."it's a case of the people making decisions not consulting with the people who actually do the work"
The Postmaster just wants something to complain about. The postoffice makes zillions of dollars every year while the cost of stamps increase and their service level remains the same...average to poor. (Oh, but they have great commercials for a service everyone in the world knows about) The postoffice is just like any other government agency...poor money managers. The postoffice has no incentive to be consumer oriented and they aren't liable for anything.
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Their (the usps postmaster) complaining because the report authors were probably given a task to see how to generate more $$ and NetFlix gets a discounted mail price because it sorts its own mail before it goes out.
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I'm a netflix subscriber and I agree with the postmaster on this one. The envelopes are the dumbest design ever. First, they're twice the size of the DVD disc. Second, it's all floppy paper, which naturally damages the discs even with normal handling, wear and tear. Third, their UPC code is not only too small, but often obscured by the disc cover being able to slide within the envelope!
Normally I'd side with Netflix, but this is something they should have consulted the postal service with, rather than trying to go on the cheap.
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...this is something they should have consulted the postal service with...
"In 2002, the Postal Service Marketing Preparations and Standards group notified the company that its Mailers were automation-compatible..."
You must have missed that part.
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I'm a postal manager and I've personally seen netflix jam on my sorting mcachines resulting in the destruction of their disks. I finally had to have them sorted by hand. I really do not have any problem with the blockbuster or gamefly DVDs, they sort just fine. You'd be suprised by the number of different types of envelopes that are supposedly machineable, but in reality are not. Again, it's a case of the people making decisions not consulting with the people who actually do the work.
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I love Netflix, but they've got really bad packaging. I have used Gamefly and Blockbuster, and their packaging is much better.
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You'd think the USPS would work with Netflix, BlockBuster, et al to come up with a mailer that makes everyone happy.
Maybe make it a little thicker, or something that would fix this problem.
I can understand the post office's point of view - $41.9 million is a huge expense, if they can't automate the sorting of these, then they should be reclassified.
I'm surprised that the engineers turned it down, but the PSMPS approved it. Maybe the guy on the latter was a Netflix customer? :)
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"$41.9 million is a huge expense..."
Well, that really depends. It was over the course of two years, and (from the figures above) if Netflix just pays 4 cents in shipping each dvd, then the USPS has collected over $46 million from them in the same time frame.
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First, that $41.9 million is EXTRA costs on top of normal expenses to the post office. Second, your math is a bit flawed in that the post office works ~300 days a year not 365 (well, 366 next year).
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Well, they did say average daily, so I figured it was safe to assume they took their yearly volume and divided it by 365; and it isn't quite clear to me whether the "estimated additional labor cost" was solely due to the floppy envelopes or included the additional personnel needed for the increased quantities of shipments. (If USPS' shipment volume doubled overall, they would most likely incur additional labor costs to handle it.)
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USPS should do away with company/govt issued cars and rein in exec perks. The/a problem with the USPS is that they never keep up with the times. Finding new ways to generate rev as their volume went down. USPS should have been the #1 online stamp provider from the beginning, not Stamps.com
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Actually most of their processing plants and some larger offices are on a 24/7 365 schedule.
I also believe the article is incorrect as in the postmaster general does not make reports like that. It sounds more like the Office of the Inspector General, they are an internal group like the Postal Inspection Service whos whole existance is based on finding waste in how the Post Office operates. They generate reports and recommendations but that does not mean they have to be followed.
yep just found another version of this story that properly names the OIG as the report creator, good fact checking betanews.
http://www.hardocp.com/n...LCxoZW50aHVzaWFzdCwsLDE=
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