Wednesday, April 07, 2010
News of the U.S. Postal Service’s proposal to end Saturday mail delivery could mean trouble for Netflix. The mail-based DVD rental company has been doing better than ever, posting a $115 million profit in 2009 and boasting a subscriber base of 12.3 million Americans. But if the USPS cancels Saturday deliveries, some Netflix customers could think twice about the value of the service since they would have to go two consecutive days without receiving DVDs, not to mention the fact that Saturday night is the movie night of the week for many families.
The Postal Service could also cause another problem for Netflix if it raises postage rates again. The company has managed to absorb the cost of other recent hikes in postage by cutting internal expenses and making its operations more efficient. But at some point there may not be anymore fat to trim, leaving Netflix with the choice of raising its rental fees. It currently spends about 78 cents on postage to mail each DVD.
One benefit the company could enjoy from the Postal Service’s changes is lower labor costs. The elimination of Saturday delivery would mean Netflix could eliminate shifts at warehouses on that day, saving the company money.
-Noel Brinkerhoff
Delivering Movies in Slow Motion (by Ethan Epstein, Slate)
Big Mailers Oppose 5-Day Delivery (by Gregg Carlstrom. Federal Times)
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