1999 was a banner year for the US Postal Service. The USPS Cycling Team, led by Lance Armstrong, recorded the first of a record 7 consecutive Tour De France victories.
Photo credit: Daniel's Eagle Blueprints Page, plus USPS logo
All of those victories were ignominiously airbrushed from the record in 2012, following years of allegation, insinuation, and scandal. I was never really clear on why the USPS got involved with bicycle racing in the first place; perhaps the office of the PMG was looking for a bit of metaphorical shine to rub off from the cycling team onto mail carriers, or vice-versa.
Ecommerce was also getting pumped up in the late 1990s. FedEx and UPS were grabbing up most of the delivery business, but the USPS was strategizing on how to claw its way into the ring. The Postal Service had certain structural scale advantages and a ubiquitous to-the-door delivery network, but lagged in services and technology.
In the annum ultima of the 20th century the USPS spawned 3 important programs:
Delivery Confirmation let you know that a package actually arrived at its destination, and was the first public aspect of the comprehensive package tracking that we completely and neurotically take for granted today. FedEx and UPS already had this, and closing the gap was important.
Priority Mail International (it had a slightly different name back then) could get a package to popular Western European destinations in 2 days. Tick that checkbox.
PC Postage enabled general-purpose computers to be used as postage meters to print out indicia, indicia being the technical term for the graphic that indicates postage.
The PC Postage program was designed around the idea that private third parties would be the primary platform developers and sales agents for computer-generated indicia, with a stated goal of fostering innovation and competition in the space.
These 3 pillars of the ecommerce strategy developed in late 1990s worked out pretty well, and by 2013, the USPS was carrying 60% of US ecommerce parcel shipments.
An ecosystem of sorts also developed around PC Postage, with a handful of companies reading the DMMs, handling the payment and security requirements, and creating applications and APIs for folks to buy and print postage for personal or business use. Before 1999, it just wasn’t possible to print postage using a PC. You had to use a dedicated postage meter.
PC Postage wasn't designed to remove barriers to entry for everyone. It was inconceivably new and risky and probably unmanageable at the time to open up direct access to indicia printing for the masses. The program aimed to open access just enough so that a handful of PC Postage partners would interface directly with the USPS. They, in turn, would create and support the tools and APIs that the marketplace needed.
The approach, even viewed through the lens of 2015, is completely reasonable, even progressive, but execution expectations for tool and API vendors have evolved considerably over the past 16 years, and the PC Postage vendors haven't kept pace.
If the PC Postage program were rolled out today, we'd expect that the PC Postage vendors would, as part of their core offerings, create modern REST APIs and self-service developer portals to meet current expectations in the technical service interoperability.
Over the past decade or so, the share of items purchased online has risen dramatically, and REST APIs have become the carrier standard for the mash-up ethos of the tech space. There are countless technology-focused enterprises hyper-focused on a specific idea composing complete businesses by mating their own core competencies with others'. The simplicity of REST has won, and if a programmer can’t churn out a simple “Hello, World” in an impulsive hour on a quiet, sleepless night, you’re just not in the game.
And yet, you won't, in 2015, find a REST API or a self-serve developer portal provided by a PC Postage vendor. There's no “Hello, World” program that you can put together in an hour. REST isn't everything, and it doesn't automatically make a service great or innovative, but it does symbolize an emphasis on open access that's shared with the intent of the PC Postage program.
If you're at a tech business and you need to work with USPS shipping, there are 3 important PC Postage vendors today. Pitney Bowes, Stamps.com, and Endicia. Actually, let’s make that 2 — if you’re not a hyper-large company with lots of time to kill and a budget for six-figure turn-on fees, you’re probably not looking at PB.
Oh, that’s right: Stamps.com is buying Endicia.
The consolidation in the space isn’t incomprehensible. Margins in carriage resale are low, and other potential suitors might have been shy about hitching their checking accounts too tightly to the USPS.
The stock market undoubtedly approves. STMP is up over 20% since the deal was announced, increasing its market cap by roughly the cost of buying Endicia. Some good reasons for the optimism:
- Stamps + Endicia controls virtually the entire SMB - USPS integration space.
- Ecommerce (and hence shipping) is growing rapidly.
- The USPS appears increasingly operationally stable.
Stamps' Q1 earnings report was strong, and the stock price's trajectory reflects that, as well the assessment that the Endicia acquisition is a really good business opportunity. And it is.
In my former role running shipping-related programs for a creative online marketplace, I’ve spoken with people at both companies, and worked very closely with more than a handful. I know them to be dedicated, hardworking, and expert. Moving forward, they should have the resources they need to do great work available to them.
And they might. But can we consider a PC Postage ecosystem with only 1 or 2 players vibrant? Is it likely to spur innovation, competition, and service? What's the driver?
You don't need to squint very hard to see an oligopoly taking form here. In an environment with little competition it’s hard to envision innovators in omnichannel retail, fulfillment, multi-modal shipping, mobile, etc., getting strong cross-organizational support for new products and features that stray from well-established patterns. If technological innovation around USPS shipping stagnates, it won’t help these companies and, in the long run, it won’t help the USPS or the US economy either.
The consolidation of current players may be inevitable, but the oligopoly shouldn’t be. The USPS would protect its own interests and act in the original spirit of the PC Postage program by making a concerted initiative to increase the number of active PC Postage partners and by evolving the program to meet current business and technology reality. There are a ton of newish but reasonably well-established tech startups in the shipping arena, so why haven't we seen any new PC Postage partners in the past decade or so?
By present-day standards, the barriers to entry for a new PC Postage partner are really high. There’s no developer key distribution page for PC Postage, no "Hello, World". A prospective partner needs to develop contacts in the program, sign contracts, and work with relatively arcane technologies to put it all together. It’s a daunting task, the sort of thing you need a whole team and a whole year to put together.
There are companies, like Shiphawk and Easypost and Shyp, among others, who are creating innovative and easy-to-consume services in the shipping space. They're each using one of the existing PC Postage vendors to connect with USPS services. It’ll be great if they get the support they need from the combined Stamps.com/Endicia entity, but it’ll be better if they have a clear path to control the technological aspects of their partnership with the USPS if that’s a core aspect of their businesses.
This would require the creation of a truly transparent and self-bootstrappable developer program inside the USPS. There are kindred initiatives in place on the Federal level right now, and I’ll bet that Megan Smith will lend a hand.
Once we get our new PC Postage vendors up and running, let’s work on expanding the bicycle delivery program. There actually used to be over 3,000 bicycle-mail-carriers in the 1950’s, but only a handful today, in Florida and Arizona. Yet another small example of history moving in the wrong direction. With more mail carrier on bikes, the Postal Service could set an example on health and environmental concerns, save some money for the pension fund, while demonstrating that they're really really hardcore. Free tip: There’s a Danish bike called the pbox that’s designed specifically for postal use. The present is clearly the coolest time ever to be schlepping cargo on a human powered vehicle.
