Next in postal privatization: Goin Postal counters in 2,000 Walmarts

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The Goin Postal pack-and-ship company has signed a deal to put small postal stores inside of 2,000 Walmarts.  While the Postmaster General will probably say it's all about customer convenience, the deal represents yet another step in the privatization of the Postal Service. 

These postal stores, it should be noted, aren’t exactly the same as the mini-post offices that the Postal Service tried piloting in 82 Staples late last year.  The Staples counters were more like contract postal units in that they sold only USPS products and services and they charged regular USPS prices.  The Goin Postal stores are part of the USPS Approved Shippers program, which consists of stores that can also offer FedEx, UPS, DHL, and anything else they want.  They make their profit by charging a fee on top of the USPS pricing.

By expanding its network of “alternate retail channels” — whether through Village Post Offices in convenience stores, stamps on consignment at retail chains, online transactions on usps.com, postal counters in Staples, or an Approved Shipper counter in Walmarts — the Postal Service has been encouraging its customers to do business at places other than regular brick-and-mortar post offices. 

In the short run, that means the Postal Service can save money by reducing the number of clerks in post offices and by cutting the hours of operation, as it’s done with POStPlan, the initiative to shorten hours at 13,000 small post offices. 

While the Postal Service likes to be coy about it, there’s no question that expanding alternate access is about cutting costs.  As a USPS memo about the Staples pilot stated, “The Pilot will be used to determine if lower costs can be realized with retail partner labor instead of the labor traditionally associated with retail windows at Post Offices.”

Along the same lines, in a Nov. 8, 2011, letter to the Government Accountability Office (GAO), a USPS vice president wrote, “Over the last five years, our current retail strategy has resulted in an increase in alternate access revenue from 24% to 35% of our total retail revenue.  This is one of the contributing factors that enabled operations to reduce window work hours by 23.7% during the same period of time.”

In the long run, the agenda of expanding retail access in private businesses is the same as it’s been for years — to close thousands of post offices.  Study after study has recommended closing brick-and-mortar post offices and replacing them with counters in private retailers.  

As the Postal Service states in a typical press release, “With nearly 100,000 places to buy stamps, ship a package or renew a passport, the U.S. Postal Service is expanding customer access to its products and services. It’s not about brick-and-mortar Post Offices anymore, as postal products move online and into retail outlets, grocery stores, office supply chains and pharmacies.”

The 2,000 Walmarts slated to get a Goin Postal store represent just under half of the 4,400 or so Walmarts in the United States.  (A list and map of them are here.)  There's no word yet about Goin Postal or another business expanding into the remaining Walmarts or other big box stores, but that's clearly the direction things are going.

 

Goin Postal Goes Walmart

Goin Postal is a franchise chain of retail shipping & receiving stores based in Zephyrhills, Florida.  The company has already arranged for its current franchisees to put stores in 500 Walmart locations, and it is currently looking for people who want to start a store in one of the other 1,500 Walmarts available for a postal counter. You can see a list of 1,350 of these Walmarts here and a map here.  

There's another map showing the USPS post offices in the same zip codes as most of these Walmarts here.  This map shows about half of the 2,000 Walmarts slated to get a Goin Postal store and it has some errors, but it’s good enough to illustrate an obvious point: Where there’s a Walmart, there’s also a post office nearby.

At this point, there’s no evidence that the Postal Service had anything to do with arranging Goin Postal’s deal with Walmart, but it’s almost certain that postal management signed off on it in some fashion, since Goin Postal, as part of the USPS Approved Shipper program, probably couldn’t have made such a move on its own.

There are currently about 6,000 Approved Shipper retail outlets, so expanding into 2,000 Walmarts represents a significant increase.  This is just the kind of growth in alternative retail access that the Postal Service has been looking for.  

Originally, the Postal Service probably envisioned creating a network of contract postal units to replace post offices, but putting postal counters in Staples ran into a lot of opposition.  The Walmart deal looks to be the next-best thing — considering the reach of Walmart, maybe even better.

 

Meet the Prices

Goin Postal was founded by Marcus Price and his wife M.J.  Beginning with just one store in 2002, they now have about 400 franchised locations across the country.  Once it has put its stores in 2,000 Walmarts, Goin Postal will become the biggest of the USPS Approved Shippers and the largest retail shipping company in the country.

According to this 2012 profile in the Tampa Bay Times, Mr. Price grew up in Cheltenham, England, the son of an airline pilot.  He met his future wife M.J. when they were both skydiving.  They soon set up an online business selling skydiving equipment, which got them into packing and shipping products. 

In addition to Goin Postal, the Prices have a second-hand clothing chain for teens and young adults called Hut no. 8 and some other businesses as well.  They also own more than a hundred website domains in case they decide to pursue some of the other business ideas. "We want to build a billion-dollar-a-year company,” says Mr. Price.  "Making money is awesome.”

The Prices are big supporters of community events, charities, and local groups.  Their Facebook page is filled with photographs of them celebrating Christmas with friends, family, and members of the community.  They’ve started a program called Postage for Patriots, which provides free postage and shipping to the families of U.S. military personnel stationed away from home.   They have another one called Luggage Love for Foster Friends in which they collect old suitcases and give them to foster children so the kids don’t have lug their belongings from foster home to foster home in plastic bags.  

Judging by the Goin Postal Facebook page, Mr. Price is not very fond of unions.  A May 19 2012 FB post reads, “In November, if you are voting for Governor in Florida, don't forget that Alex Sink HATES Goin' Postal because of her ties with the postal unions and has blocked us getting several government contracts citing the name as the excuse. Will Weatheford has gone to bat for us several times trying to get her to reverse her position but she's a typical in-the-pocket-of-the-unions career politician.”  Mr. Price also likes to send messages on Twitter, some of which are kind of odd, as illustrated by one he seems to have written after a visit to Walmart.

 

The Approved Shippers Program

Along with Shipping Depot, Pak Mail, PostNet, Office Depot, and the UPS Store, Goin Postal is a member of the USPS Approved Shippers program.  Most of these locations are included among the options one finds on the USPS Find Locations website page. 

Like other members of the Approved Shippers program, Goin Postal stores offer most USPS products and services, as well as FedEx and DHL, plus copying, faxing, mailbox rentals, cards, unique gift items, and office supplies. 

Walmarts, by the way, was already selling stamps as part of the Stamps-on-Consignment program, but  just stamps.  Now you’ll be able to all sorts of USPS business at the Goin Postal stores in Walmarts — First Class Mail, Priority Mail, Express Mail, Parcel Post, Certified Mail, etc. 

The Postal Service has apparently decided that opening mini-post offices in Staples was causing too much controversy and getting too much pushback from the APWU, so it has changed tactics.  Instead of expanding its retail outlets by putting contract units in more Staples — an initiative it called the Retail Partner Expansion Program — the Postal Service shifted its Staples pilot into the Approved Shipper program. 

Expanding the Approved Shipper program into Walmarts will probably seem less controversial than the Retail Partner program with Staples because Approved Shippers have been around for several years and they look less like a regular post office since they offer non-USPS products and services. 

Expanding into Walmarts also didn’t require the approval of the Postal Regulatory Commission, which did need to sign off on an aspect of the Staples deal.  Since Staples wasn’t going to be charging an extra fee on USPS products, it needed to get a discount from the Postal Service to help with its profit margin.  That required a Negotiated Service Agreement (NSA), which has to be approved by the PRC.  There’s no evidence that the Postal Service has submitted a NSA to the PRC on the Goin Postal deal.

There’s more information about the Approved Shipper program on this USPS FAQ sheet.

 

Goin Postal Franchises

According to the Goin Postal website, many of its store owners are past employees of the Postal Service.  Perhaps some postmasters who’ve found themselves at the short end of POStPlan or postal workers who are out of a job as a result of the plant consolidations will be interested in a second career as operators of a Goin Postal counter in Walmarts.  Here’s some information about how these franchise deals will work (as described in an email from Mr. Price to his franchisees).

The Walmart Goin Postal locations will be between 350 and 400 square feet, somewhat smaller than the typical GP store.  They will come “fully furnished” with fixtures and equipment.  There’s an initial fee of $9,950, plus the initial rent for the location and some startup inventory, such as cardboard boxes, packing peanuts, stamps, and shipping forms.  The total initial investment comes to around $13,000. 

Goin Postal will pay the rent, electric, internet, and insurance directly to Walmarts, and the franchisee will pay Goin’ Postal a fixed monthly fee for those expenses plus support costs.  In most locations, the monthly fee will be between $1,600 and $2,200 per month depending on the market.  Then there’s the cost for staff, uniforms, and goods to replace what gets sold.

After all those expenses, it’s not clear how much profit one can expect from opening a Goin Postal in a Walmart store, but there’s obviously going to be plenty of foot traffic and an opportunity to sell lots of mailing products along with the USPS mailing services. (There’s more information about starting a Goin Postal franchise on its website here, and there's a copy of the franchise disclosure agreement here.)

 

Investigating Approved Shippers

Before you jump into becoming a Goin Postal franchisee, you may want to take a look at the website “Unhappy Franchise.”  In 2012, they took note of the declining number of Goin Postal franchises over the previous four years. 

“What could go wrong with a brand name inspired by mental illness and workplace violence?” asked Unhappy Franchise.  According to data released by the Small Business Administration (SBA), “Goin’ Postal franchise owners who qualified for SBA-backed franchise loans had a high loan failure rate of 33%.”

Unhappy Franchise also posted an anonymous note from a GP franchisee saying that he closed his store after heavy losses and “now they want to sue me for liquidated damages.”

Goin Postal CEO Marcus Price himself responded to the Unhappy Franchise report, noting that the decline in franchise occurred as a result of the recession and the burst of the real estate bubble.  He also wrote that “we almost never sue for liquidated damages unless the franchisee has done something egregious to cause us to.”

The USPS Office of Inspector General is currently doing an audit investigation of the Postal Service’s oversight of its Approved Shipper program.  The report, which is due out in January 2015, will look at how well the shipping companies are ensuring mail security and display of Postal Service signage, as well as what customers think about the program.  There are already some interesting comments on the OIG’s website about approved shippers, both pro & con.

In any case, with a couple of thousand more Approved Shipper outlets on the horizon, the OIG's report will have additional significance, and the Postal Service will have a much bigger job overseeing the program.

(Photo credits: Walmart interior; Marcus & M.J. Price; Staples protest; Walmart exterior)

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