Major online retailers split on plan to cut Saturday mail

(Michael Robinson-chavez/the Washington Post)
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By Ed O'Keefe
Washington Post Staff Writer
Wednesday, June 23, 2010

Lawmakers on Wednesday will hear split views on proposed cuts in Saturday mail delivery from two of the nation's leading online retailers and largest customers of the U.S. Postal Service.

Representatives of will call delivery cuts "a bad idea," while Netflix, the DVD mail-rental company, will say cuts would have little, if any, impact on its subscribers, according to testimony provided by congressional aides and prepared for a House-Senate hearing on the future of the mail agency.

"Ceasing Saturday deliveries would be much worse for our rural customers, who simply would not be able to receive parcels on Saturday because there are no alternatives," Amazon Vice President Paul Misener will tell lawmakers. The online retailer would shift at least a sixth of its business to other carriers if the Postal Service stops delivering on Saturdays, Misener will say.

Netflix does not endorse Saturday delivery cuts "in a vacuum" but considers them "a reasonable proposal in light of the very difficult challenges facing the Postal Service," according to the prepared testimony of executive Andrew Rendich.

Executives from Condé Nast magazines and Hallmark also will testify Wednesday, but their testimony was unavailable.

The Postal Service in March introduced plans to save billions of dollars by ending deliveries on Saturdays. Post offices and PO boxes would still be open, according to the plans. Postal officials also want Congress to reverse a 2006 law requiring the agency to make billions of dollars in annual payments to pre-fund retiree health benefits.

Postal regulators heard from business leaders this week at a town hall forum in Chicago.

CVS Caremark, which shipped more than 50 million prescriptions by mail in 2009, warned that customers would have to shoulder higher costs triggered by altered delivery schedules or higher rates charged by Postal competitors.

"These added costs not only impact patients' pockets but will also place significant fiscal strain on our health-care system," Kenneth Czarnecki, senior vice president at CVS Caremark, said at the forum, hosted by the Postal Regulatory Commission.

Furniture store Crate & Barrel, which sends millions of catalogues through the Postal Service, said it reluctantly supports Saturday cuts if the Postal Service controls postage rates.

"We would rather adjust when a customer hears or interacts with us -- vis-a-vis a five-day-week service schedule -- versus the necessity of discontinuing mailing a customer altogether due to rate increases," said John R. Seebeck, the chain's marketing director. Crate & Barrel also urged the agency to adopt greater labor flexibilities, increase products and services and retail outlets, and close unneeded post offices.

Christopher Huckle, publisher of the Cadillac News in northwest Michigan, told regulators that delivery cuts would irreparably harm his Monday-to-Saturday publication and delivery schedule.

"It dismays me to discover that even as important daily newspapers like ours grapple with changing reader habits, a down economy and fiscally strapped advertisers, the element that is most likely to force us to change our business plan comes from a distribution vendor, not a change in our market or our readers," Huckle said. Delivery cuts also would mean less advertising revenue, demand for lower subscription rates, and staff layoffs, he said.

Postal regulators will hold two more town hall forums to hear from business leaders and mail customers on Wednesday in Rapid City, S.D., and Monday in Buffalo. The panel is expected to issue a formal, nonbinding opinion on the future of the Postal Service in late fall.

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