February 5th, 2010 by Skip McGrath

I was reading Auctionbytes today when I saw a story about the post office expanding its test of greeting card sales.  This will be about as profitable as its sales of teddy bears, Christmas ornaments, mailers, scales and all of the other junk you see gathering dust and not selling in the Post Office lobby.

First of all, I don’t think the Post Office, a government agency, should be competing with local business. In our small town there is a small independent office supply store one block from the post office and a greeting card store about three blocks away. Secondly –the post office does not know anything about retail business.

How the post office loses money

Every year the post office loses money and this results in them raising rates for mail.  But did you know there are two big areas where the post office loses money: Retail sales and Air Express –the overnight service that competes with FedEx and UPS.  It seems that both FedEx and UPS make money, but the post office loses money operating the same service.

If you study business in college, one of the first things you learn about marketing and management is “stick to your knitting.”  Losing focus and dabbling in lines of business that are outside your company’s area of specialty or expertise is one of the fastest ways to lose money –and the USPS is a prime example of this.

If the post office would stick to selling stamps and delivering mail –they may not become profitable –but they would dramatically cut their losses and postal rates would go up much more slowly.  And private businesses that USPS competes with would do better –creating more private sector jobs –rather than public ones.

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