Retailers, small businesses brace for postal cuts

SAN FRANCISCO -- Snail mail is about to trudge even slower, forcing companies dependent on the postal service, such as prescription-medication firm Express Scripts and thousands of small businesses, to revamp fundamental business models.

The U.S. Postal Service's plan to save $2.1 billion a year and fend off possible bankruptcy threatens to end almost all overnight delivery of first-class letters and postcards next year.

"Everyone from Netflix to timely magazines to the greeting card industry to political campaigns who still rely massively on traditional mail deliveries will be negatively impacted," says Adam Hanft, a consumer-marketing specialist who heads Hanft Projects.

Online retailers — not to mention small and midsize businesses — that are dependent on timely shipping could feel the pinch. Nearly one-fourth of local merchants use direct mail as a crucial marketing strategy, according to MerchantCircle, the largest social network of local business owners in the U.S. estimates 92% of the specialized T-shirts and apparel it sells are shipped, via a third-party, through the Postal Service. It ships about 150,000 packages a month, which typically take two to three days for delivery.

The threat of discontinued Saturday mail service, which would require congressional approval, could add two days. "That is unacceptable," says Mark Venezia, vice president of global sales and marketing for Spreadshirt. The company may start shipping some products by UPS, he says.

Netflix spokesman Steve Swasey says the company has been aware of the situation for a while, and is working with the Postal Service to minimize any impact on customers who get DVDs in the mail. Netflix has shifted heavily to streaming: 22 million of its 35 million customers view content that way. Its international operations only offer streaming.

Brian Henry, a spokesman for Express Scripts, which processes millions of prescriptions a year for home delivery and at retail pharmacies, says it is "premature to speculate" on the impact of the postal budget costs. He said the company is looking at options. and had no comment. Both online retailers offer customers the choice of receiving goods via regular mail, UPS or FedEx.

EBay, which works with 25 million sellers globally, in October launched Fast N' Free shipping, signaling to buyers that a specific item ships free and will likely arrive within four business days.

Others potentially affected include the federal government, which sends out Social Security checks; catalog companies; mail-order houses; and companies such as banks and utilities with routine billing cycles.