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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.

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Comments

 

Just image the lack of revenue for the post office if Netflix didn't exsist.  I'd like to see the official numbers of what the USPS receives annually due to Netflix compared to the cost of hand processing the envelopes.  I'm pretty sure the USPS comes out ahead.  

John Arnold (Posted 12.06.07 10:11 AM) Report Abuse

they are complaining about having to work?? do they not see that more than 1/2 of their income is not what it used to be due to the popularity of email.  they should shut their mouths and be happy they still have jobs! they complain b/c of companies like fed-ex and ups taking their business... now when they get the business, they complain b/c they have to work... people these days!

amanda (Posted 12.06.07 10:11 AM) Report Abuse

Once again, the post office is whining because they have to do their job and if it can't be always automated, then they don't want any part of it. They should be lucky that they have Netflix envelopes to process, no matter how it is done. With todays internet technology, we all know the USPO will be a thing of the past in the not too distant future and it's their complaining about this that always makes me wish it has already happened. I can't remember the last time I was in a post office.

Scott Horton (Posted 12.06.07 10:12 AM) Report Abuse

So this is why I this happens:  I mail off 2 DVD's the same day, and Netflix get's 1 of them the next day.  They don't receive the other until 3 days later.  Very frustrating.  I'm glad they are going to be redesigning their packages.

Gabe (Posted 12.06.07 10:12 AM) Report Abuse

I joined Netflix a coulple of years ago and ordered one dvd movie.  I never recieved it and only got the runaround from the post office.  Cancelled my account and will never open it again!!

Melinda Lee (Posted 12.06.07 10:13 AM) Report Abuse

The Post Office should be happy to have a customer.  Pretty soon, all they will have to deliver is Netflix, and credit card offers

D. Bosler (Posted 12.06.07 10:14 AM) Report Abuse

Don't mess with my Netflix. THis is the best thing going for people who cannot seem to get rentals back to the local store, as well as make time to watch a movie in three days. Glad to see Netflix has a plan, and I also thank the Post Office for processing those precious red envelopes.

John L (Posted 12.06.07 10:15 AM) Report Abuse

postal workers complain because they have to WORK!...give me a break....lazy goverment employees......I wish I could work as hard as they do...

kennie (Posted 12.06.07 10:16 AM) Report Abuse

I really believe the post office should be happy it's making all the money from the postage from Netflix, and shouldn't complain.  By hand feeding the envelopes, it gives the postal workers something to do, besides standing around.  I have a very good friend who works doing exactly what you've described, and he says that postal workers get paid excellent wages for doing hardly nothing!!!!  So quit complaining.

Gerrie (Posted 12.06.07 10:16 AM) Report Abuse

If I were netflix, I would take my $688,000 per day that I give the post office and either negotiate a better rate with one of the other parcel carriers, or simply send the movies digitally via the internet that you can burn to a DVD and play that evening.  When you give the post office THAT much business, I would think they can suffer a little bit.  

Daniel (Posted 12.06.07 10:16 AM) Report Abuse

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