These alternatives have the potential to provide postal  services at a lower cost to USPS than post offices, since USPS does not  staff or maintain retail partners’ facilities, and self-service options reduce  the need for labor and facilities. These oversight duties  include monitoring and servicing kiosks and training and monitoring retail  partners. According to USPS, retail alternatives improve service by providing  access to customers not only in more places but also for longer hours. Although retail alternatives expand service locations and hours, certain  characteristics of these alternatives could be problematic for some postal  customers. USPS Has Increased Revenue from Retail Alternatives, but Has Not Demonstrated Cost Savings

USPS has stated that retail alternatives support its goal to improve  financial performance by generating revenue while offering products and  services through outlets that are less costly than post offices. USPS has projected that by 2020 alternatives to post offices will  likely account for 60 percent of its retail revenue. USPS announced in September  2011, that it will review as many as 15,000 post offices for possible  closure, which it stated could produce annual savings of $1.5 billion as  part of an effort to eliminate $20 billion in annual costs by 2015. Retail Network Plan Needed to Maximize the Potential of Retail Alternatives

Given USPS’s financial challenges, a clear plan guiding investments in its  retail network is essential, including how it intends to increase access  through retail alternatives while considering cuts to its network of post  offices. Feedback about customers’ awareness and use of retail alternatives can  help USPS be sure its message is reaching its intended audience. If  USPS closes these post offices as planned, it will be increasingly  important for it to effectively encourage widespread adoption of retail  alternatives. USPS Takes Steps to Help Ensure Retail Partners Follow Procedures, but Could Improve Oversight

As USPS has expanded its use of retail partners, it has taken steps to  help ensure that such third-party retailers offer products and services in  accordance with its procedures. Specifically, USPS has established  procedures for entering into written agreements with retail partners,  training them, and monitoring their performance. Monitoring

USPS’s guidance for overseeing CPUs states that local USPS officials  are required to monitor the performance of CPUs on a quarterly basis  through on-site reviews of their operations and compliance with policies. Recommendations for Executive Action

We are making the following two recommendations to the Postmaster  General:
To better ensure that USPS’s efforts to expand access through retail  alternatives support its strategic goals to improve its service and  financial performance, the Postmaster General should develop and  implement a plan with a timeline to guide efforts to modernize USPS’s  retail network that addresses both traditional post offices and retail  alternatives. This plan should also include: criteria for ensuring the retail network continues to provide  adequate access for customers as it is restructured; procedures for obtaining reliable retail revenue and cost data to  measure progress and inform future decision making; and a method to assess whether USPS’s communications strategy is  effectively reaching customers, particularly those customers in  areas where post offices may close. Agency Comments

We provided a draft of this report to USPS for review and comment. Postal Service’s (USPS) efforts to  expand access through retail alternatives support its strategic goals of  improving service and financial performance, (2) how USPS  communicates with customers about the availability of its products and  services at retail alternatives, and (3) what actions USPS has taken to  oversee third parties that provide postal products and services. Because of  these adjustments, USPS officials said this data source is more accurate  for reporting overall retail revenue. To determine what actions USPS has taken to oversee third parties that  provide access to postal products and services, in addition to the site  visits previously discussed, we reviewed USPS documents and  interviewed USPS officials in headquarters and at the local level to  determine how USPS recruits, contracts with, trains, and monitors retail  partners. We did not  assess other aspects of management, such as project planning or  management of financial systems. Related GAO Products

U.S. Postal Service: Restructuring Urgently Needed to Achieve Financial  Viability.
Why GAO Did This Study

Declines in mail volume have brought the U.S. Postal Service (USPS) to the brink of financial insolvency. Action to ensure its financial viability is urgently needed. Visits to post offices have also declined, and in an effort to cut costs, USPS is considering closing nearly half of its 32,000 post offices by 2015. In their place, alternatives to post offices, such as the Internet, self-service kiosks, and partnerships with retailers, are increasingly important for providing access to postal services. Retail alternatives also hold potential to help improve financial performance by providing services at a lower cost than post offices. As requested, this report discusses how (1) USPS's efforts to expand access through retail alternatives support its service and financial performance goals, (2) USPS communicates with the public about retail alternatives, and (3) USPS oversees its retail partners. To conduct this work, GAO analyzed USPS documents and data and interviewed USPS officials and stakeholders. GAO also interviewed operators of postal retail partnerships.

What GAO Found

USPS has expanded access to its services through alternatives to post offices in support of its goals to improve service and financial performance. Retail alternatives offer service in more locations and for longer hours, enhancing convenience for many customers, but certain characteristics of these alternatives could be problematic for others. For example, services obtained from some alternatives cost more because of additional fees, which could deter use by price-sensitive customers. Furthermore, although about $5 billion of its $18 billion in fiscal year 2010 retail revenue came from alternatives, USPS officials said it is too early to realize related cost savings. USPS also lacks the performance measures and data needed to show how alternatives have affected its financial performance. A data-driven plan to guide its retail network restructuring could provide a clear path for achieving goals. Without such a plan, USPS may miss opportunities to achieve cost savings and identify which alternatives hold the most promise. USPS has sought to raise customers' awareness by developing media campaigns, enhancing its online tools for locating postal access points, and creating standard symbols for post offices and retail alternatives to show which products and services they offer. However, USPS has not assessed whether its message is reaching its customers, such as by using one of its existing customer surveys, and therefore does not know to what extent customers are aware of and willing to use its various retail alternatives. Although the public increasingly uses postal retail alternatives, more widespread adoption will be needed if USPS is to close thousands of post offices as planned in the next few years. USPS has projected that by 2020 alternatives to post offices will account for 60 percent of its retail revenue. USPS's oversight of its retail partners, which includes entering into written agreements with them and providing training and guidance, could be improved if USPS modified its approach to monitoring compliance with its procedures. Local USPS officials are supposed to conduct quarterly reviews of retail partners to make sure they are following mailing procedures, but according to retail partners and USPS officials in field and local offices, these reviews do not always occur as often as intended because of resource constraints. A risk-based monitoring approach would allow targeting limited USPS oversight resources to areas of concern and thus address issues that could otherwise discourage customers from adopting retail alternatives, such as inadequate service. USPS should develop a plan to guide its retail network restructuring that is supported by relevant performance measures and data and includes a method to assess the effectiveness of its public communication strategy. USPS should also implement a risk-based approach to monitoring retail partners. USPS reviewed a draft of this report and stated it is developing a plan to guide its retail network restructuring and agreed to review how it monitors retail partners.