Let's learn from owls and disrupt the postal service

I wasn’t going to write an entry for the INFORMS June OR blog challenge: “OR for muggles” because I couldn’t think of anything relevant to say, despite having watched all seven of the Harry Potter movies in the last two weeks in preparation for the final installment. However, this blog post started me thinking and I realised that, actually, there is something that’s been bothering me for a while, and this would be a perfect excuse to have a rant.

In the above-mentioned post, the author considers the owl post system used by the magical folk in the Harry Potter world, and argues that we have much to learn from the owls to “improve the punctuality and precision of mail services”.

My reaction to the owl post system was slightly different; I was stuck by how the addressing system works. The name of the addressee is written on the front of the envelope, and that’s it! Instead of having to know where the letter should be delivered, you simply need to know to whom it should be delivered, and the system (the owl) takes care of the location details. It is ridiculous that we muggles can’t do this too!

A common theme on the internet these days is “disruption”; investors are constantly looking for the next industry to disrupt. I’d suggest that the postal industry is archaic and ripe for disruption.

Email works much more like the owl addressing system, and is much more powerful because of it. I simply write the email address of a contact in the “to” field, and the system arranges delivery to the recipient, and he can check and manage his email at his convenience, from a variety of devices. He can also set up complex handling rules and filters if desired.

Imagine a service (let’s call it “SmartMail”) where I can register online and be assigned a unique code, which is perhaps my email address or twitter handle. When I would usually give my postal address, I would instead give my SmartMail id: @DCWoods.

Any mail sent to this id is automatically routed according to rules I specify on the SmartMail website. Perhaps letters from white-listed businesses I route to my PO Box, packages and hand-written envelopes I route to my home address, unsolicited marketing material I route to the recycling center, and everything else I opt to have scanned and emailed to me. At any time I can set up rules for redirecting or managing my addresses, I can view my entire mail history, and I can opt in or out of mail from particular businesses.

This sort of system should be relatively simple for postal services to implement. Why haven’t they? Let’s consider their incentives.

Misdirected mail. I hate to imagine the annual volume and cost of misdirected mail. Personally, I get more mail for previous occupants of my house than I do for myself. And because when I move I don’t update my address with everyone I’ve ever done business with, I’m sure that my mail is still going to various locations around New Zealand and Australia. A large proportion of misdirected mail is probably also unwanted or unsolicited; if I am wanting or expecting it I’m more likely to update my address to continue receiving it.

I don’t know the proportion of letters sent that are simply thrown out because they are unwanted or misdirected, but I’d be willing to bet that it’s substantial. In fact I’d say that postal services’ business models are based on it.

Let’s assume that postal services make their money from the volume of letters they deliver, the more letters delivered the more profit. A system like I describe would result in fewer mis-directions. On the face of it this shouldn’t mean less mail; the same letters will be sent, they will just get to the right people. However, if I start getting mail from every newsletter or business I’ve ever had contact with - mail that is currently going to my past addresses - I’m going to start cancelling it. This won’t hurt the business that was sending me the mail, I wasn’t reading it anyway, but it will start hurting the postal service. Their profit margins are dependent on misdirected mail that never ends up in the right place but continues to be sent.

It seems very unlikely that existing postal services will sabotage their businesses by implementing a service like this; they are in enough trouble with losing business to email anyway, this would be a nail in their coffin. And if they were going to do it, they already would have. Perhaps though there is room for a startup to come into this space with a disruptive service, and steal the remaining profits in physical mail away from the incumbents.

I’d pay money for a service like this, that scanned most of my mail in and emailed it to me. I bet companies sending mail would love the extra analytics they could get on how much of their mail is trashed and how much physically delivered. The only hesitation I have is that it would tend to accelerate the shift away from physical mail at all, and drive businesses towards fully electronic communication. The more a SmartMail service is successful, the more it destroys its own market. The question is whether the part that remains is enough to make a worthwhile business.

This post is my contribution to the June OR blog challenge. The Operations Research connection is rather tenuous, but part of the OR mindset is thinking of ways to improve the efficiency of various systems; this isn’t always formulating models.

Update: @MrBoJensen has pointed out the virtualpostmail service to me. This is sort of what I was ranting about, but only available in the US, unfortunately.