Same-day delivery is at the vanguard of competition among some of the savviest, most valuable companies vying for dominance where omni-channel commerce blurs the lines between online and offline shopping. We exist in a world where consumers place the utmost importance on the ability to order an item and get it into their hands as quickly as possible.
Last month, eBay announced its same-day delivery in New York. Amazon upped the ante with one-hour delivery. Uber has dabbled in immediate delivery from ice cream to lunches. And many start-ups, such as OrderUp and PostMates are fulfilling consumers’ increasing desires for immediate satisfaction. (Disclosure: my venture capital firm, Revolution Ventures, has an investment in OrderUp).
So, it’s great to see the Postal Service trying to compete. But honestly, what took so long?
If you look at the true advantage of the Postal Service over FedEx, UPS, and the others, it is not logistics or price or the ability to do same-day delivery. The competitors are often better at this — it’s the monopoly the Postal Service has been granted to touch your mailbox and all your mail. Nobody else is allowed to do this without permission. If you were running the USPS, wouldn’t you look for ways to leverage this monopoly?
It’s an idea that has been on my mind for some time. In 2009, when the economy was a mess, President Obama asked Larry Summers to step in and help. I knew Larry from Revolution Money, where we served on the board together before the company was acquired by American Express. I consider him perhaps the smartest person I’ve ever met, despite our different views on a few political topics.
Those were the days of TARP, and as a result Larry was on the “circuit” in Washington. At an Aspen Institute Innovation Economy Conference, Politico reported that Larry asked technology execs not just to ask for things from the government but also to come forward with ideas to help make government better:
“A very large number of people from the private sector come to Washington… and I’m one stop on the tour. Almost always what they want is for the federal government to do something for them… and that’s fair enough.” But, he said on “very rare occasions” when they come to the government and offer ideas for how they can help the country, “it is a startling conversation changer.” Summers urged the audience, which was heavily stocked with technology executives and trade association officials, to “think about what your institution should be called on to do not in its own interest, but in the broader national interest.”
It had bothered me for a long time that the Postal Service was in a position to leverage its monopoly but missed the opportunity to serve its customers better. I shot this email to Larry, suggesting one idea of how the USPS could use its monopoly for good, providing a new valuable service for consumers, helping to offset its deficit, and becoming the disruptor rather than the disrupted.
Larry was gracious and promised to “pass it on to the people involved in the Post Office.”
While the Postal Service never implemented the idea, other companies in the category did try to innovate. Outbox was one of them. Outbox would digitize your mail and make it available to you online or on a mobile app, for a monthly fee.
The founders of the company, Evan Baehr and Will Davis, said they “knew that the USPS would not be able to work out its own problems, so perhaps naively, we hoped to partner with USPS to provide an alternative to the physical delivery of postal mail to a subset of users, hoping this would spur further innovation and cost savings.”
But rather than allow consumer-friendly innovation, the Postmaster General essentially put a bullet in the head of their business model because, in the USPS’s words, “The Postal Service is focused on providing an essential service in our mission to serve the American public and does not view Outbox as supporting that mission.”
You guessed it — it interfered with the Post Office’s monopoly. It’s one thing that the Postal Service does not leverage its monopoly for the full advantage of the tax-paying American populace, but it’s another that it has been used to stifle innovation.
Perhaps the Postal Service’s push into same-day delivery foreshadows a new era of innovation that helps to convert the Postal Service from an economic burden of decreasing relevance into something better for consumers and the federal deficit. My fingers are crossed. But I’m not holding my breath.
An earlier version of this column stated that the Postal Service “continued to cost the taxpayers billions a year.” The Postal Service receives no tax dollars for operating expenses. We regret the error.
Savage co-founded Revolution with Steve Case and Donn Davis. He is managing partner of Revolution Ventures, a venture capital firm in Washington, D.C. that focuses on early-stage investments and has invested in companies such as LivingSocial, Zipcar, Booker, and Revolution Money.