Saturday, September 1, 2012

Post the Lesson from Parcel Post’s Beginnings

I realize this isn’t the most obvious time for me to hold out to you the U.S. Postal Service as part of a lesson for retailers on how to manage your businesses. The Postal Service announced a $5.2 billion loss for the last fiscal quarter and is right on target to declare a loss of $15 billion for the fiscal year. They recently announced they wasted $1.2 million in printing costs because they were so far off in predicting demand—in this case, dearth of demand—for stamps commemorating the twentieth anniversary of “The Simpsons” TV show.
     But let’s take it back exactly 100 years. The U.S. Congress had just authorized the post office to deliver packages. This was the beginning of parcel post, which kicked off January 1, 1913.
     Marc Levinson writes in a posting that the impact on local retailers parallels what e-tailing is doing currently: Booksellers, hardware stores, and all sorts of other retailers faced the reality that, even with the shipping costs, merchandise from Sears Roebuck or Montgomery Ward would cost less. Prior to parcel post, the railway express shipping charges for large items were prohibitive, and delivery would be made only to central locations rather than to the house.
     With parcel post, the local retailers who wanted to survive had to:
  • Sell items that couldn’t be obtained via parcel post. This was difficult when competing with the comprehensiveness of a catalog, but it could be done, such as by selling locally-produced distinctive merchandise. 
  • Provide additional value to justify the additional cost on items which could be obtained via parcel post. Advice, training, and other services would add such value. 
     Mail order and parcel post are still around, although Montgomery Ward isn’t and Sears gave up on the catalog a long time ago. And plenty of small to midsize retail businesses survived and thrived. In fact, they used parcel post to grow their businesses, just as smart store retailers embrace an internet presence now.
     The lesson is for smart retailing communities to avoid turf battles they’re unlikely to win. Prior to 1910, the railroads, express companies, National Association of Retail Grocers, and National Retail Hardware Association had all lobbied against the implementation of parcel post. But the best that could be hoped for was a holding action. Consumers want value, and loyalty flees promptly. Devote your resources to providing distinctive offerings and unparalleled value.

Click below for more: 
Learn From the History of Giant Retailers

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