How Can the Postal Service Reduce the Costs Associated with Postage Stamps?
Filed under Finances: Cost & Revenue
How much does it cost to develop, print, ship, inventory, secure, sell, and cancel a stamp used to mail a letter? What about the stamps that are never sold? The Postal Service destroys billions of stamps each year because they are obsolete. In FY 2008, the Postal Service printed 37 billion stamps, which cost $78 million to print. In that same year, they destroyed old stamps, some of which were printed more than 10 years ago, that were valued at approximately $2.8 billion. Those stamps were printed, shipped, counted multiple times in various inventories, and finally shipped back for destruction under secure conditions. How much does this cost and does the Postal Service benefit from the expense?
Are there better alternatives to stamps? Business customers often rent postage meters and use permits for bulk mail. Now, the advent of online postage vendors has given individual customers an alternative to stamps. Customers that use online postage can customize their postage and incorporate approved language or pictures.
Loading ... Loading ... Loading ...Not everyone has access to a computer. What can we do for people who do not have access to online postage or who simply do not want to use online postage? One answer may be simplifying the Postal Service’s current stamp inventory. What if all postage stamps were “Forever Stamps”? Stamps would never become obsolete and have to be destroyed, and production costs would never eat up their contribution to overhead. After a rate increase — now generally an annual event rather than every 3 or 4 years — there would be no 1-cent or 2-cent stamp shortages or rush to produce the next generation of denominated stamps.
What about stamp collectors? Would philatelic sales suffer if the Postal Service reduced the denominations it offered? Commemorative Forever Stamps could be issued in limited quantities to satisfy collectors. Some commemorative stamps could be sold locally, while others could only be ordered and shipped direct from a central location. Forever Stamps that marked holidays or other special events such as birthdays would be very useful for people who wanted to stock up. And what could be more appropriate for wedding invitations than “Forever Love” stamps?
Do you know of a better method of postage payment, convenient and available to everybody that could be implemented?
Tell us what you think.
This topic is hosted by the OIG’s Field Financial East directorate.
Topic was revised to indicate that 37 billion stamps not $37 billion worth of stamps were printed in 2008.
110 Responses to “How Can the Postal Service Reduce the Costs Associated with Postage Stamps?”
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January 26th, 2010 at 7:28 am
USPS still has very small offices & contract stations that don’t have meters themselves – they still use stamps for everything. What would become of those offices? How can we expect everyone to use meters when we don’t do it ourselves?
Convert everything to Forever stamps – have one for the first ounce rate and another for the additional ounce rate – then noone will ever need more than 12 stamps on anything, as that would need to be presented to a Postal employee anyway. But you’ll still need the high denomination stamps for Express.
January 26th, 2010 at 7:24 am
Still need stamps, but the idea of making all stamps that are issued as forever type stamps is a good idea. Could save millions, maybe even billions on reducing the above described destruction/obsoleting processes if they were held in a station’s inventory until sold. Additional sales opportunities could be realized through the idea of mentioning “these are no longer obsoleted, however when our stock is depleted, there are no more made…” in regards to a specific year’s Christmas stamp or other special occasions, stamps, etc.
January 26th, 2010 at 1:09 am
You want stamps – single stamps will cost you more – the more stamps you buy the cheaper they are……
January 25th, 2010 at 10:33 pm
stamps are to meters, as coins are to credit cards.
There remains a need for stamps. Want to save money?
Cut management and empower employees. They are already doing the work in spite of management.
January 25th, 2010 at 9:08 pm
What about the millions of dollars spent by collectors. That postage is pure profit as it is never, or mostly never, used for the purpose for which it was printed? Do we really want to give up those millions of dollars also?
January 25th, 2010 at 7:15 pm
Question #1: Why is the USPS destroying stamps at all? As long as they have a postage value printed they can be used. Destroying them makes no sense.
Two tips the USPS should take from the trading card industry:
Tip #1: Drop the requirement that a person has to be dead to appear on a stamp. Begin putting celebrities and superstars on stamps. People buy stamps now for postage. Put LeBron James or Jay-Z on a stamp and watch collector’s and fans snap them up (and never use them!). Topps puts out a set of baseball cards with over 600 different cards. Why can’t USPS do the same and issue over 600 different stamps. Baseball fans would buy them.
Tip #2: Issue limited edition stamps. Like short print, insert and parallels in the sports card industry, they drive up interest and bring people back to buy more. Put out a series of Derek Jeter stamps. Have Jeter autograph one out of every 10,000 stamps and randomly insert those books into the general supply. People will buy stamps attempting to get the Jeter autograph.
You ask if eliminating stamps is the answer. That is what is wrong with the USPS today. Eliminate, cut, drop, reduce are the only words they know. We should GROW the stamp market, not kill it off.
January 25th, 2010 at 6:10 pm
I work in a small level 11 office, and I find all the odd denominations useful. I also have customers that like the odd denominations to put on packages and flats.
But I do feel that the forever concept needs to be expanded to include stamped envelopes (not just the addressed ones), postcards, stamped postcards and airmail. I have to order a minimum of 100 of many of these, and I will never go through that many before having them sent in for destruction. Think about how much money is being spent in the destruction of this product.
Commemoratives-make them smaller. I get too many complaints from customers saying that they are too big.
January 25th, 2010 at 1:43 pm
[apologies in advance for the long post]
I have always liked postage stamps. I been a stamp collector since I was a kid (about 30 years now). I give sheets or books of stamps as gifts for all occasions, especially as wedding gifts so the newlyweds can send out all their Thank You notes.
I believe that USPS issues TOO MANY different stamps. I would like the number of new commemorative issues to be cut at least by HALF. But commemoriatives cannot be discontinued, that would cause USPS to lose a lot of revenue. With so many different commemoratives issues, it is really a difficult financial challenge for stamp collectors to acquire each and every issue. I think most stamp collectors would agree that there are TOO MANY commemorative stamp issues and fewer would make their hobby MORE enjoyable.
The cost to develop new stamp issues should always be looked at for ways to trim expenses. Re-using designs is one method being employed now and should be continued.
Perhaps there needs to be better forecasting of demand for certain issues so that printing, distribution, accountability, and destruction costs can be better controlled. Perhaps indivual post offices need more local control over the quantity of stamps sent to them. Perhaps a longer sales window for each issue will result in higher sales and less cost for recall and destruction.
As for all the different denominations availble, I believe we still need these. There are a lot of small, rural post offices that are not automated and in order for them to sell postage, they must still use and apply actual postage stamps on letters and parcels.
I operate a small home business and I ship approximately 60 small packets and parcels every week. I continue to use actual postage stamps for the vast majority and I buy an average of 200 dollars worth of stamps per week to ship these parcels. I keep an inventory of stamps worth about 400 dollars on hand at all times. I rely on the variety of denominations available in order to meet all the different postage rates required.
There are so many domestic and international postage rates that I need all of these stamps in order to fit my postage onto small-sized parcels. My smallest size box has a top measurement of 4 inches by 6 inches. After affixing my address label, the small customs form, and an airmail rubber stamp impression, there is not whole lot of space left for postage. It can be quite a struggle to fit the required posage in the space I have left. I rely on the largest stamp denominations possible to get the job done without wasting postage by applying more value than needed.
My current stock of stamps for shipping parcels includes the following denominations (in cents):
1, 2, 3, 4, 5, 10, 17, 23, 27, 39, 41, 42, 44, 50, 58, 59, 60, 61, 62, 63, 69, 70, 72, 75, 76, 78, 80, 84, 90, 94, 98, 1.00, 4.80, 4.95, and 16.50
Most of these stamps are from old rates and were issues several years ago. For example, a 23 cent stamps has not been available for probably at least 3 years. The few 60, 63, and 70 cents stamps I have now are the last I will be able to get — when I run out I will not be able to get more.
Just this past week, I wanted to buy some 72 cents stamps at a post office. They had none as, I assume, they had to send back their stock for destruction. Now, I am having a harder time putting $1.44 in postage on interntional parcels that require it. I now must visit a post office that does have 72 cent stamps available or purchase them online at usps.com.
So, to summarize:
The number of commemorative stamp issues can be easily reduced and still satisfy stamp collectors and those that wish to use commemoratives for mailing. Let local post offices order quantities more in line with their anticipated sales.
The number of definitive issues should continue on the present course. The needs of small non-automated post offices need to be considered.
January 25th, 2010 at 12:52 pm
1.stamps have more than a pure utilitarian function in culture.
2. the customers who are just looking for postage for the item sent, should have it. This would naturally
reduce stamp stock to be destroyed.
An educated guess: this would mean more advance sales against future mailing costs by customers. Inflation protected postage rates.
May as well sell gift cards with a postage rate locked in to buy postage anytime in the future. No stamp stock until needed. Maybe they already do.
3.Virtual stamps are not practical yet. Virtual mail including multimedia attachments sent to your street address(not email) is already available and no postage needed last time I checked.
January 25th, 2010 at 12:44 pm
You don’t want to totally obliterate the things that make the PO unique. Stamps are one of those things. While economically it may make sense to not even have stamps, I think there are a lot of people that would not like that to happen, including collectors, but also some people like to use different stamps at different times of the year, and even stamps of things they like like lighthouses for example. I don’t feel that way personally, but I know a lot of people do. There are a lot of other ways to save money without destroying what people recognize as unique to the USPS.