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The U.S. Postal Service is tired of being used and abused by Netflix

Netflix is one of the most popular video rental services and it revolutionized the industry by expanding the mail rental business into a major market, by clever use of online services.  It recently pleased customers by dropping its 3 DVD-at-a-time rental fee another dollar, to a low price of $15.99 a month.  It also recently made up with long time rival Blockbuster.

However, Netflix has some serious competition for the online/mail-order rental market.  Despite settling its difference with Blockbuster, the mostly-store based giant threatens Netflix by pushing its online offerings with a broad array of promotional offers.  Further, Apple has been speculating on launching its own online rental service to rival Netflix.

Now Netflix has an unexpected new detractor: the U.S. Postal Service.  The U.S. Postal Service's Inspector General feels Netflix has used and abused the system.  The bone of contention is Netflix's use of oversized mailers.  The use of these the Postal Service estimates cost a staggering $41.9M in additional labor over the last two years do to the "nonmachinable nature" of Netflix packages.

The Inspector General is fed up and is preparing to take action after mounting losses.  Conservative estimates of the situation would account for $61.5M in additional losses over the next two years.  The office issued an ultimatum to Netflix -- reshape their mailers or face a service charge of 17 cents a mailer.

While the small fine sounds insignificant, it is calculated that it would reduce Netflix's operating income by 67 percent. 

Netflix agreed it will cooperate and redesign the mailer, but it is another bump in the road for the still wildly successful mail-order service.

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limits
By tanishalfelven on 12/8/2007 5:10:36 AM , Rating: 3
doesn't the post office already have limits on what size can qualify for reduced rate shipping. and isn't the bulk rate only if you do much of the precessing your self. seems kinda strange that the post office allowed them to use oversized mailer in the first place and not charge extra. why was the post offcie taking a hit on each mail sent ?




RE: limits
By Lazarus Dark on 12/8/2007 6:48:06 AM , Rating: 5
I was thinking that too.
I work at fedex ground and manage the smalls area(envelopes and small boxes), so I know how this works. If a large customers packaging is such that we have to use extra handling and labor, we call them and work with them to change their packaging or tell them we will have to charge them extra. Simple, done. No fuss.
If the Netflix packaging caused a problem with handling, they should have said something long ago. Why would they have allowed so much loss to occur for years? And then call it "abuse"?
I mean sure, the USPS is slow, but I didn't know they were "slow". It doesn't take a genius to see this kind of thing. Then again, in my experience, people in the package handling business don't tend to do things the smart or efficient way.


RE: limits
By danrien on 12/8/2007 11:19:05 AM , Rating: 4
I've worked at both fedex ground and the usps and i have to say that as far as our fedex ground terminal goes, usps is far more efficient. also, usps doesn't negotiate shipping prices and such with shippers, instead, a customer buys a type of shipment method (netflix bought mass first class, instead of standard class, which involves much of the processing already being done), in order to simplify everything for their business i am guessing. However, the USPS does not solely use a conveyor belt system to move letters. It keeps them vertical, and they have to go through gates and the like. Thus, a letter can quickly become non-machinable. However, the USPS has a long standing tradition of letting the customer choose how to ship, instead of working with the customer to decide how they want to ship (simply because the entire US population is their customer base), so to do something like this is to go out of their way. But I am sure they do it for other mass mailings (such as JC Penny's catalogs and the like).

Also, to clarify things, the USPS is paid for completely by postage. They do not receive any tax dollars.

I also wouldn't qualify the USPS as "slow". To get a letter from one end of the US to the other, it takes approximately three days. Try doing that with Fedex Ground. And they deliver on Saturdays.


RE: limits
By tanishalfelven on 12/8/2007 12:46:24 PM , Rating: 2
the thing that boggles the mind is why allow it from the start ?
oh yeah and USPS is not slow is you compare rates (even that can depend on the size of the package).
however your comparing apples to oranges when you compare fedex ground to first class. fedex ground is more of a competitor to parcel post or Heida mail.


RE: limits
By stonemetal on 12/9/07, Rating: 0
RE: limits
By VoodooChicken on 12/9/2007 4:30:08 PM , Rating: 2
Once, I sent a handwritten letter from St. Louis and it got to San Antonio the NEXT DAY! I'm still shocked. Didn't do anything special, just plain ol 32-33 cent stamp of the day, and lo and behold.


RE: limits
By Fritzr on 12/9/2007 4:39:17 PM , Rating: 4
Postage is a fee ... the Postal Stamp is your token that says the fee was paid. Think of a cinema. You buy a ticket at the box office. The ticket is not the movie you wanted to see, it is only a token that you can take to the theatre to show that you paid a fee to watch the movie. The ticket is worthless unless presented to the attendant guarding the theatre entrance where the movie that you paid to see is being shown.

Stamp in general is a mark made by a device that presses an imprint. Rubber stamps and simlar devices for quicly printing a design are the most common. There are also stamps that make imprints in various materials

A Tax Stamp is an imprint (stamp) or token (like a postal stamp) that certifies that a tax (not a fee) was paid. The Boston Tea Party was a protest over British taxation policies, the tea tax had actually been reduced before the protest :) The tax stamp only certifies that the seller paid the tax to the government. A similar tax token is on cigarettes and liquor. These are not service fees they are taxes. Postal cancelation is also a stamp that marks the postal stamp as having been used...The stamp's value has been "canceled"

Entry and Exit stamps and "instant" visas are stamps placed in a passport using a "rubber stamp". These certify that you have been processed through a Port of Entry and often do not involve payment of any kind.

As for transit time with USPS. Allow 24-36 hrs to reach a central sorting center, 24-48hrs to ship to the central sorting center near destination and 24-48hrs to deliver. shorter if you are near a center, longer if you are far away. The delays at start and end reflect that a letter posted at 4P when pickup for the day is 3P will begin moving the following day, similarly traffic may delay a tractor trailer forcing the mail to wait a day to get into the postman's jeep.


RE: limits
By UNHchabo on 12/9/2007 11:10:16 PM , Rating: 2
About the only Tax Stamp that's in effect right now is the one on items that fall under the National Firearms Act of 1934: full-autos, suppressors, short-barreled rifles and shotguns, etc. When you buy one of these items, you have to fill out a bunch of paperwork with the ATF (which includes an extensive, ~six-month background check) and pay a $200 tax, and then they give you a tax stamp that you must keep as long as you own the item (and if you sell it, the buyer has to go through the same process).

Firearms-rights advocates make the Boston Tea Party comparison, and it fits much better in this case than it does for postage, where you are simply paying a fee for having the USPS handle your mail.

As for the time it takes to cross the US, mail often does only take a few days to get anywhere in the country. If you are having recurring problems going between Dallas and Houston, then something's up, but that's certainly not typical of the rest of the country.


RE: limits
By PitViper007 on 12/10/2007 1:30:27 PM , Rating: 2
Actually, isn't there a tax stamp on liquor as well? I seem to think that there is. I'll have to check when I get home.


Bump in the road?
By nowayout99 on 12/8/2007 4:06:18 AM , Rating: 4
A bit over dramatic language for the story. Flix has already said they'll just change the envelopes. Not a big deal. "Nothing to see here."




RE: Bump in the road?
By GeorgeOrwell on 12/8/07, Rating: -1
RE: Bump in the road?
By retrospooty on 12/8/2007 9:17:40 AM , Rating: 5
"It took the USPS making big deal for the exec-u-stiffs at Netflix to change the envelopes, didn't it?"

Not really. they just threatened to raise rates unless Netfix redesigned the package. So, Netflix redesigned the package.

"And just maybe someone at Netflix should have thought something about shipping all those giant envelopes on the taxpayer dime.It certainly doesn't make Netflix look good when they might have been one of the key factors in increasing postal rates for everyone in the entire US."


GIANT? Have you ever received a Netflix envelope? Its the size of a CD and maybe 1/2 again in length. The issue is that it is slightly larger than a std envelope and wont fit through mail sorters.

As for raising the rates for the entire US... The USPS has raised rates steadily a few cents every few years sinceI was a young child. Long before Netflix ever existed.

Furthermore, if you knew anything about bulk mailing with the USPS, a sample package is given, and a price is quoted, that is that... What happened here is that after a few years the USPS didn't like the price that they themselves gave and wants more money.


RE: Bump in the road?
By spluurfg on 12/8/2007 10:48:28 AM , Rating: 3
Also, the USPS not long ago reset their rates to be based on package size (that came into effect May 2007). Presumably this is to aid them in machine sorting packages, so maybe Netflix was slow.


RE: Bump in the road?
By mindless1 on 12/10/2007 10:31:13 PM , Rating: 2
I think you have it completely wrong. Netflix was paying for a package size they weren't using, and the Postal Service had already told them this was a problem but the warning was ignored and ignored until it became clear a friendly reminder would not work anymore, that it had to be a strongly worded "ultimatum".

You can try to give a company time to work out problems but then when they never do it, you're put in a bind trying to play nice with someone who ignores you.


RE: Bump in the road?
By codeThug on 12/8/2007 12:26:52 PM , Rating: 2
quote:
increasing postal rates for everyone in the entire US


It's much cheaper than getting boned by Block Buster.


RE: Bump in the road?
By geeg on 12/8/2007 9:21:13 AM , Rating: 2
True. Because companies always tell the truth entirely.


RE: Bump in the road?
By Polynikes on 12/8/2007 2:20:40 PM , Rating: 2
Couldn't agree more.


I Welcome A Redesign...
By cubdukat on 12/8/2007 10:31:12 AM , Rating: 3
...preferrably something that's lazy postamn-proof?

Our postman just crams our mail into the box, and I've had two DVDs broken because of him. Fortunately, I haven't been charged for either one, but I truly wonder just how much money Netflix loses because of things like that.

Maybe they could deduct some of that from what they owe the USPS...




RE: I Welcome A Redesign...
By tanishalfelven on 12/8/07, Rating: 0
RE: I Welcome A Redesign...
By cubdukat on 12/8/2007 4:02:42 PM , Rating: 3
Uh...no?

I've been there several times when he's done this to others as well. I can't speak for the others, but my box is emptied daily. It's definitely a lazy mailman. I spoken to his supervisor a couple times, but I might as well be talking in Mandarin Chinese, for all the good that does.

But keep workin' on that sarcasm thing, though...


RE: I Welcome A Redesign...