A Close Up Look at gopost

The gopost parcel lockers appear all but ready for live customer tests. Viewing one in person clearly showed to me how a customer thinking of using a gopost would interact and how it would work for both able and disabled individualsm, as well as adults of a full range of heights.

What a Customer First Sees

A customer interested in using gopost will have no trouble finding it.  The bright red and blue colors make it stand out, just like Redbox and Blockbuster kiosks do.    The use of color focuses the consumers attention right where they have to go, the center console. Given that it is both bright red and stands out a few inches from the lockers themselves, it is impossible to miss.

The Center Console

The center console appears to have four components.  In the top-center there is a security camera similar to what exists at ATM’s.  Clearly, this is how the Postal Service will ensure that the user of gopost is the authorized user and if not, they will have an image of the perpetrator.

Below the camera is a LCD screen that, more than likely, is a touch screen similar to what is commonly used on ATM’s today.  A touch screen would be needed if a person was to type in a shipment tracking number rather than scanning a barcode as noted below.

gopost  has a receipt slot for printing receipts.  Clearly a receipt provides customers added confidence when they tender a parcel to gopost .  It is unclear if receipts would be printed when a parcel is received.  Demonstrations of similar parcel lockers in Europe suggest that no receipt will be printed when receiving a parcel.

Finally, in the lower-left side of the console there is a laser scanner, similar to what is found in self-checkout lines at a supermarket.   This scanner clearly would be capable of scanning a printed barcode.  It is unclear if the scanning is needed for shipping or receiving parcels, as receiving parcels may only involve typing a tracking number.  It is unclear if the scanner could also scan a barcode image on a smart phone.

What cannot be seen from the console is whether there are any mobile telecommunications capabilities that would allow a person to send a signal from their mobile to open a locker.   My sense is that this capability does not exist, as it does not exist in similar lockers elsewhere.

The gopost center console differs from DHL’s packstation, as it does not have a credit card slot for either identification or the purchase of shipping services.   gopost differs from Amazon’s installation, as it has the laser scanner and Amazon’s design does not.

What the Screen Currently Shows.

As gopost is not yet live, the screen shows a placeholder.  The placeholder uses the same gopost logo with the “pick up – ship out – get going” trademarked tag line.   While the website introduced the the theme of the likely advertising campaign, ”Say hello to gopost, say goodbye to missed packages,” the gopost touchscreen adds a second advertising slogan, “The new place for 24/7 shipping and receiving.”

Size and Capabilities and Location Considerations

The original drawings posted on this site made gopost seem incredibly huge.  However, up close gopost clearly has human dimensions.  The large lockers at the top are 4 feet, two inches above ground, a height that most people taller than 5’2″ should have no trouble reaching.  For people that are shorter, gopost has two large lockers that are 23 inches above the ground.

The standard installations have a total of 80 lockers, in three sizes.

  • 34 small – approximately 18″ deep by 12″ wide by 3 1/2″ tall
  • 32 medium- approximately 18″ deep by 12″ wide by 8 1/2″ tall
  • 14 large – approximately 18″ deep by 12″ wide by 19″ tall

The gopost parcel lockers differ from designed used by DHL and Amazon, as only the Postal Service design has handles.  Both gopost and DHL’s packstation use unnumbered lockers and Amazon uses lockers with numbers.  By not having numbered lockers, it is clear that once the existence of a package is identified, a locker will pop open.   The use of unnumbered lockers has now been tested in a couple thousand sites world wide, so not having numbered lockers should not pose a problem.

With these three sizes, it would seem that the Postal Service would be able to handle a wide range of small parcels.  If the security is tight enough, one can imagine the Postal Service handling some small electronics that shippers have preferred using other carriers up till now.  Shippers that currently ship with the Postal Service, or use FedEx SmartPost, Equiship, UPS Surepost, or DHL Global Mail should all note the size of these lockers when they decide what size boxes they use.

The current configuration is a little under 21 feet wide and 4 feet deep including the awning on top.  For indoor installation, where an awning may not be needed or wanted, the depth is just under 2 feet.  Both the left and right sets of parcel lockers are 115″ and the center console is 20″  feet deep.  The front of gopost is 7’2″and the front of the canopy is 7’6″, so all but a few NBA centers will have no problem fitting under the canopy and using gopost.

The design is modular, which would allow the Postal Service to design smaller and larger goposts as demand adjusts.  Besides the red center console, there are right and left center locker modules, and right and left outer modules.   This suggests that gopost can be expanded if needed and smaller ones can be designed for use in smaller communities and rural areas.

As the installation at the South Arlington Post Office shows, the standard configuration would fit easily either outside a drug store, grocery store or one of the large convenience store/gas stations.  It is also easy to imagine putting them inside shopping malls as there is usually a lot of wall space where one could be placed, without impacting shop windows.

Looking at the gopost up close, there appear to be three considerations in deciding where it could be located.

  1. The location must have sufficient space behind the gopost unit to allow for ventilation.   Walking around the back of gopost , it is impossible not to notice the fan noise, as effort is made to dissipate heat generated by the electronics in the center console.
  2. The location must have access to electricity.  This should not be a problem.
  3. The location must have internet access, either through a mobile-based or wired connection to the Internet.  It was unclear from looking at the sites which type of connection was used in these installations.  For locations near Post Offices both hard wire and wireless connections are options.  For stand-alone location, the Postal Service may need an internet connection through a telecommunications carrier.

Conclusion

The Postal Service appears to have done a good job in designing their version of the parcel locker.   gopost is visibly attractive.  It is large, but the choice of contrasting colors has the effect of making it look less massive than it probably is.  The design should help advance acceptance of the concept.

The design appears well suited for installation in many types of locations.  Obviously, security and maintenance issues may affect where gopost is located.  Clearly, in higher security risk locations, indoor placement would be preferred.

The major maintenance concern relates to gopost’s need for ventilation.  When placed close to a wall, the 20″ gap between the back of gopost and a wall can act like a trap for leaves and debris.   The Postal Service may need to have wings designed to block the area behind goPost when it is installed close to a wall.  The other ventilation-related concern relates to ensuring that air vents have some form of a screen on the inside to prevent unwanted material being blown or dropped inside.

Overall, the project team that got this rolling should get some pats on the back from upper management for the visual design.   The next step is seeing how well it works in live tests. Let’s hope it succeeds as gopost could become a key component in ensuring the Postal Service’s survival..

Mail Model For Rural America

In previous posts, this blog has described the retail strategies in Germany, Sweden and Denmark. While northern Sweden has some rural areas which are as rural as any in the Continental United States, these countries have a urban-rural mix equivalent to a state east of the Mississippi with the most rural areas similar to rural areas in these states as well.

Australia is much more characteristic to the population density of mountain West and Great Plains. Australia has a number of large cities with population well over a million but most of the country is sparsely populated. Vast stretches of Western Australia is desert and much of the country not near the coast are home to ranches, farms, and mining villages.

Australia Post has a tighter universal service requirement for providing retail access than the United States Postal Service. Australia Post is required to have 4,000 retail outlets with 2,500 located in remote and rural areas. Given that the United States has nearly 14.47 times the population, the Postal Service would have to have nearly 58,000 outlets with 36,000 in remote and rural areas. The focus on remote and rural areas reflects the fact that Australia has a population density of 7.5 people per square mile compared to 82.9 in the United States. (For reference: Sweden is 53.7; Germany is 594.0; and Denmark is 331.7)

So how does Australia Post handle this burden and not go broke and in fact exceeds its mandate and operates 4,433 outlets? (Information from this post drawn and quoted from Post and Parcel. (quotes are in italics))

Corporate Owned Stores (827 locations, 19% of all outlets) are standard post offices offering the full range of Australia Post services in facilities owned or leased by Australia Post. Employees working in corporate owned stores are Australia Post EmployeesFranchise Outlets (28 locations, 1% of all outlets) serve small communities that have between 800 and 1,000 customers. These locations sell Australia Post products and services exclusively. Australia Post has the lease for all franchise outlets, pays for their fit out and owns the inventory. Franchises are set for a fixed ten year period. Operators pay a fee for the licence and receive an exit fee when they end the lease.

Licensed Post Offices (2,941 locations, 66% of all outlets) act as agents for Australia Post products and operate in large and small markets. Approximately half operate in association with another business. There is no fixed period for a licence and outlets are bought and sold on the open market. Licensees are responsible for the premises and own the inventory in the post office. They are independently owned businesses and their retail merchandise range is traded on a wholesale basis. Licensees are only obligated to stock a core product range which is primarily mail service-related.

Community Postal Agents (637 locations, 14% of all outlets) are small operations usually located in rural and remote areas. They provide mail delivery services and are also required by Australia Post’s community service obligations to sell stamps and accept mail from people living in rural and remote areas. These facilities are outsourced and operators receive payment based on their volume of activity.

Australia Post’s retail outlets offer a range of services that make them like a combination of a Post Office, an office supply store, and a card and gift shop. Some are co-located with coffee shops, making them more like community centers where people come to do business but may stay and chat over a cup of coffee or tea. In addition to postal products and mailing and shipping supplies, these outlets sell general merchandise such as CD’s and DVD’s books, souvenirs, gift cards, technology products, pre-paid cell phone time cards, and in some locations provide banking teller services under contract with one or more Australian banks.

A better picture of Australia Post’s dominant retail model, Licensed Post Offices, comes from advertisements for the sale of these businesses. A web search identifies a couple of outlets that are available for sale in small markets and illustrates that retail services can be provided profitably in even very small towns.

Currently on the market is a licensed postal outlet in Cloncurry, Queensland, Australia. The business is selling for 370,000 Australian dollars plus the value of inventory.

The advertising indicates that the business makes sense for a married couple working with one part-time clerk.

The outlet is in a town of fewer than 2,500 people (less than 4,000 in the county (shire) and 75 miles from the nearest postal outlet. The town and the surrounding area are populated by people working the mining and ranching.

The business that is being sold includes not just the retail outlet but the right to operate the 5 delivery routes that serve the surrounding territory. The pictures clearly show the type of stock that the outlet carriers that in addition to the stock that postal outlets generally carriers also sell soft drinks and Darrell Lea Chocolates.

The sale price also includes a building that includes two offices that are currently rented.
What Australian Post has done is show that even areas that are the most rural in the United States can be served profitably by contract operations. However, Australia Post’s approach is very different in setting up these contract outlets. Australia Post gives its outlets sufficient management support to make the contract operation a turn-key business solution including all non-postal and shipping supply inventory but also offers a full range of non-postal services at wholesale prices that its contractors can buy as well. Australia Post most likely advises its outlets on how to expand their business by expanding the breadth of products that they offer with the hope that Australia Post becomes the supplier of those products. Finally, it appears that Australia Post offers rural outlets to expand its revenue and profits by offering both retail and delivery services in a territory. In that way, a local business person becomes a partner because growing his business also grows Australia Post’s business.
Australia Post’s effort to transform its contract outlet business toward a franchise model further shows the difference between the approaches that the Postal Service and Australia Post have taken to expand retail access. The brochure on franchising is designed to allow Australia Post to compete with all other firms offering franchise opportunities and shows that creating a successful contract approach requires more than just allowing someone to sell postal products.
Transitioning to a contract model for rural service would be traumatic for employees now working in those offices. The Postal Service could ease the transition in one or two ways.
First, it could offer significant early retirement and/or severance packages to those employees that could be affected. As a rule of thumb, the cost of these packages, including transfers and training would be about equal to half a year’s salary.
Second, it could offer local postmasters the right of first refusal to buy the postal outlet moving from a corporate to a contract model. This is similar to what happens during a condominium conversion. The latter model would be less expensive for the Postal Service, even if the selling price was modest. This option would also give existing postmasters real opportunities to advance and remain in their community. As illustrated by what rural post offices do in Australia, postmasters that chose to buy the local postal outlet would have substantial opportunities to use their knowledge of their community to expand their product offerings to add revenue and profits to the outlet. It is foreseeable that these new contract postal outlets would be responsible for delivery routes originating from the outlet as well.
Changing to a contract outlet model would also require revamping the whole concept of managing retail. Instead of managing employees, the Postal Service would be managing a large number of independent businesses. Managers would then focus on and be rewarded for making the contract outlets and the local “postmasters” within their responsibility as successful as possible. Headquarters would have to create a Post Office University just like McDonald’s Hamburger University.
Fleshing out this model would be a substantial effort. Those looking at potential business models need a more detailed examination of this approach including the financial and organizational impacts on the Postal Service and the possibility of profits for those choosing to buy a local post office outlet. Postmaster Associations, whose members know their communities and their community needs better than anyone in Washington, could provide valuable input into what would be required to allow a postmaster to take over the local operation and turn it into a profitable business. Now is the time to begin this effort.

USPS Delivered 30% of FedEx Ground Shipments in FedEx’s Fiscal Fourth Quarter

For the twelfth consecutive quarter  FedEx has increased the proportion of shipments handled by its FedEx Ground subsidiary over the same quarter the previous year.    The continued rapid growth of FedEx Ground’s SmartPost service reflects the continuing increase in business-to-consumer shipments that FedEx transports for its customers.

The following chart illustrates the share of FedEx Ground shipments delivered by the Postal Service since 2009.  The increase in USPS share of deliveries reflects the faster market growth of FexEx SmartPost as compared to FedEx Ground’s delivery using other FedEx Ground or FedEx Home contractors. 

The fast growth rate of Fedex SmartPost reflects the need of B-2-C online retailers for a low cost delivery service that allows them to sell low-value and light weight products at prices sufficiently attractive to consumers to choose an on-line purchase.   As traditional  brick and mortar merchants continue to increase the share of their sales from stores to the web,  the USPS delivered share of FedEx’s ground delivery parcels should continue to grow.

Similar data on United Parcel Service’s use of the Postal Service to deliver light weight and low value parcels is not publicly available.   However, the Postal Service’s share of UPS deliveries is likely to be quite small as UPS has just begun serious marketing of its UPS SmartPost service.

In Past Decade, Congress Has Made Naming Post Offices a Top Priority

In the decade that the long-term financial problems of the Postal Service have been discussed openly, Post Office naming bills have become a focus of Congress.   In each of the past five Congresses over 15% of all bills passed and signed into law named a Post Office.

The increase in interest in naming Post Offices began in the Congress that served when 9/11 occurred.   As such, it is likely that most of those honored by having a Post Office named after them died in the terrorist attacks in the United States, or served their country in the wars in Afghanistan and Iraq that followed.  If Congress expected that the naming a Post Office would provide a long-lasting memorial, the financial problems of the Postal Service risk making the memorial an ephemeral one at best.  It is too bad that Congress does not understand the irony in its rush to name Post Offices to honor heroes when it has not taken steps to ensure the survival of the institution whose facilities are used to provide the memorial.

The following charts developed by Noah Veltman shows that the increase in the proportion of laws naming Post Offices is a recent phenomenon.  In the 26 years prior to the 106th Congress, Post Office naming bills did not represent more than 5% of the bills passed into law.  (The 106th Congress served during the last two years of President Bill Clinton’s 2nd term.)

FedEx Uses USPS for 30.4% of Ground Shipments

FedEx’s 2nd quarter earnings release illustrates its business focus on e-commerce and home delivery.   Highlights are as follows:

From the press release:

“Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services.”

Tidbits on FedEx Ground and FedEx SmartPost From the Statistical Book:

  • 30.4% of FedEx Ground shipments are delivered by the United States Postal Service.
  • 8.4% of FedEx Ground revenue is generated by shipments delivered by the Postal Service
  • Revenue per shipment for FedEx SmartPost is up 4.1%  In its press release, FedEx says the difference is due to fuel, suggesting that contract prices prior to fuel surcharges are nearly unchanged from 2010 levels. The challenge FedEx has raising prices confirms the price sensitivity of the small parcel market.
  • FedEx Ground Shipments delivered by FedEx grew by 3.5%.
  • FedEx SmartPost Shipments delivered by the Postal Service Grew by 17.0%

Tidbits on FedEx Express From the Statistical Book:

  • Express business is relatively weak, as U.S. domestic express volume is down 3.7% and international priority volume is down 2.7%  from 2010 levels.
  • The decline from 2010 levels are less in the 2nd Quarter than in the 1st.  Unclear whether this is due to a slight improvement in the economy or easier comparisons.
  • FedEx Express’s weakest product is the Envelope. Volume declined 7.0% from 2010 levels
  • The average revenue from an overnight envelope is $11.48; for an overnight box is $22.05.   These are the prices that the Postal Service’s contract rates must compete with.

Implications from FedEx Results

  • There are some questions about the future of the overnight envelope.  The volume decline suggests that e-diversion is having a greater impact than economic recovery.
  • FedEx appears to has made a conscious decision to focus on B-2-C shippers.   Its portfolio of services is tailored to these shippers.  Furthermore, its heavy use of the Postal Service for delivery indicates that it wants to provide a one-stop-shop for these shippers.
  • The growth of FedEx Ground will exceed the growth of UPS Ground for another quarter.  FedEx, including shipments delivered by the Postal Service, is taking market share away from United Parcel Service.
  • FedEx will have a very strong 3rd quarter, as it will have a higher proportion of home delivery shipments than is found in other quarters and on-line shipments are expected to grow in the mid to high teens this quarter while brick and mortar retail sales will be between flat and low single-digit percentages.