Private mail thrives

Press, 30 August 1988, Page 20

Private mail thrives

From a correspondent for the “Economist” in New York

HOW much is pure convenience worth? In America, the going rate seems to be about 12 per cent — or 3 cents American on the price of a 25-cent postage stamp. That is the margin charged by small businessmen who promise to handle post and postage quicker and better than the United States Post Office. Thousands of private post offices are springing up across America. The largest, a franchise operation called Mail Boxes Etc., has over 700 branches and had sales of about SUSSOM in 198788.

Private post offices provide most of the same services as the Government-run kind. They rent post-office boxes to receive mail. They sell stamps and post letters for you.

Private post offices buy many of their wares from the Government competitor at full price. Though a few also supplement income from postal services with

fax machines and photocopying, the trick to making private post offices pay is reselling these services for more than the post office down the street can charge for exactly the same thing. So why pay more? Answer: for the convenience. Queues to buy stamps are shorter at private post offices than at the public ones. Post boxes carry prestigious street addresses and suite

numbers rather than humble P.O. box numbers. Unlike the Government kind, private post boxes accept packages, and post can be picked up at more convenient times. And private post offices provide help in packing parcels as well as posting them. All told, such small conveniences can add up to a fair-sized business. Founded in 1980, Mail Boxes Etc is now one of America’s fastest growing franchisers. Some of the most successful franchisees boast sales of over $U5650,000 a year.

The economies of scale enjoyed by the United States Post Office in this kind of operation ought to be vast, so it reflects badly on it that entrepreneurs can provide such competition. Having expanded into 43 states, Mail Boxes is now casting its eyes on international markets.

Copyright—The Economist