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Post office seeing red over Netflix envelopes

Posted Dec 06 2007, 07:17 AM by Kim Peterson
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Image Credit: Flyawaycafe.comThose red DVD mailers Netflix uses are a huge pain in the butt for postal workers. In a report out this week, the Postal Service says it has to manually process 70% of Netflix's DVD envelopes because they jam up the mail machines.

And here's government bureaucracy at its finest. Normally the Postal Service would charge Netflix for having a "nonmachineable" mailpiece. But this kind of envelope isn't discussed in the official "Mail Manual," so the Postal Service can't classify it as nonmachineable.

So the Postal Service has had to suck it up and hand-process Netflix envelopes. That's added $41.9 million in labor costs over the past two years and will add $61.5 million over the next two, the service estimates.

No more. The Postal Service's Inspector General wants Netflix to make its envelopes easier to process or pay a 17-cent surcharge for each one. Netflix says it will redesign its mailer to avoid the fee. A spokesman spins the issue to note that the company actually saves the post office money by going to the post office to get returned discs. Netflix is entitled to have the discs delivered because it pays for first-class postage.

Netflix mails 1.6 million DVDs a day.

Citi analysts said that if Netflix has to pay the surcharge, monthly operating income per subscriber would fall by two-thirds, from $1.05 to 35 cents. Citi reiterated its "sell" rating on Netflix. 

Investors shrugged off the mini-drama yesterday. Netflix shares rose 18 cents to close at $23.93.

Comments

 

AWWWWWWW...............

Poor postal workers. You actually have to touch someones mail instead of just staring off into space and acting like their customers should consider themselves lucky to have anyone there to begin with. How about a little sense of urgency while doing your job? Even though YOU are being paid by the hour to be there, I am NOT being paid to wait 20 minutes in line while you putz around showing nothing but distaste and indifference for the job you will more than likely have until the day you retire at age 65.

If not for places like Netflix and eBay, you would not even have your jobs anymore. Don't you remember your cries about email killing the USPS? How about making your machines so that they can now sort thicker packages and stop gouging your customers  $0.17 for having an envelope with something thicker than a piece of paper in it. It must be nice to be the only FOR PROFIT part of the US Government!

RANT OVER!!!!

Article says: "Netflix is entitled to have the discs delivered because it pays for first-class postage.".

This implies that Netflix has paid extra so the mean ol' USPS should back off. Not so. First Class is the cheapest way to mail a CD. Cheaper even than Media Mail (aka long ago as Book Rate) because of the light weight of the CD package.

I think that the USPS should be grateful they have business. In the future they wont have those 1.8million pieces of mail going throught USPS, everyone will just download it right to the TV. Even now you can just download the movie right from netfilx.  Everything will be integrated with the internet and there will be no need for snail mail. I pay all but 3 of my household bills on the net therefore eliminating the need for USPS. So I not needing the mail for say 7 of my bills every month times that by 1million people who probibly are in the same situation as me, thats 7million pieces of mail not going through USPS every month (almost 3million dollars every month). Hence why rates constantly go up with the USPS. There being too picky. Junk mail that you use to get in the snail mail now come in email. Advertisers are coming up with different tacktics to get there product sold, and snail mail isnt it now-a-days. They ought to thank there luck stars for companies like netflix, ebay, without them they would be broke for sure.

I Like Blockbuster better than NetFlix. Their exchange "instore" mailers is the Best!!!

I think the Postal Service needs to look at their Priorties and that is getting the mail out and delivered to the proper addresses instead of them having to do some manual work.  They can't even get the mail delivered to the right addresses here in this town and this is a small town.  They have raised costs so much that the majority of the people only use it when they have too, which is for businesses and around the Holidays.  No wonder they are losing business to UPS or Federal Express and other services.  

What is the difference between the Blockbuster Online envelopes and the Netflix envelopes?  Should they both be charged?  

Big deal! So now Netflix and the PO will solve a problem and both go on with their service. You can't blame the PO because of an oversite or Netflix for taking advantage of it. It does seem that the PO would have a dept. where mailers could work with the PO to avoid these problems to begin with. It would certainly help the PO's image.

I think it's past time for someone to scale the PO back a bit.  Forty-one cents to mail an envelope???  Not to mention that stupid "thickness" guide they're going by now vs. weight.  What a joke.  PO has always run only in the black - profit, profit, profit.  Want some cheese with your whine/wine of "hand processing?"  You'll get no sympathy from me.

NetFlix wins this one. The Postal Service wrote the original rules and NetFlix followed those rules to the letter. NerFlix also has a valid point regarding their pick-up of returned discs, which saved the USPS money. The USPS should have handled this better.

I guess this means they'll have to raise prices of stamps again and stop delivering mail on Saturday.  

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