Despite looming budget problems and shrinking mail volume, the U.S. Postal Service is moving forward on a gift card pilot program designed to offer more convenience and value to consumers at post offices.
According to Steven E. Mills, Manager of Retail Products at the USPS, the targeted roll-out date for the pilot is June 10, 2011, and can run up to two years. American Express Co. won the contract to manage the pilot and issue open-loop, single-use gift cards. The initial roll-out will involve 1,800 to 1,900 post offices nationwide, at locations where greeting cards are already sold. The pilot is set to expand to about 3,000 additional locations in October to take advantage of holiday sales.
Mills said the cards will be AmEx Gold prepaid cards denominated in $25 and $50, with a variable card that can be loaded with a value anywhere between $25 and $100. The cards might incorporate postal imagery, such as stamp designs, at some point in the pilot, Mills said, with holiday-themed art that appears on postage potentially gracing the cards as well.
The cards will be displayed in 16-pocket "spinners" and located on retail countertops. The cards may also be co-located with greeting cards in select locations, Mills said. USPS retail associates will be trained on how to activate the cards on the post office's POS system. The USPS will share in revenue from card purchase (activation) fees, Mills added.
Mills said the USPS has been eyeing prepaid cards for 15 years, but held off until now because the prepaid card industry had not yet matured. The USPS once offered the Liberty Cash Card, which was a closed-loop prepaid card that could only be used at postal outlets. The program ended in the mid 1990s. "The industry wasn't developed at that point and there wasn't enough demand to sustain that program," he noted.
While including closed-loop, retailer-specific gift cards in the product mix has not been ruled out in the future, Mills said the USPS settled on open-loop cards because they supply customers with the widest possible range of choices for redeeming the value on the cards.
It was reported in Post & Parcel that the USPS may face a $2 billion to $3 billion budget shortfall by the fall of 2011. But the USPS has not projected how much the cards will generate in revenue for the postal service. "That's what the pilot is for, to see whether this is something that we want to continue to do in the future and determine how much revenue, how much customer demand and satisfaction would be for this type of program," Mills said.
The USPS has two main goals for selling gift cards. The cash-strapped agency is looking to gift cards to increase revenues and as a way to offer more convenience to consumers, Mills said.
"We currently offer ReadyPost, which is our mailing and shipping supplies," he noted. "We have greeting cards in select post offices. We have mail related items such as stamps, stamp holders. We have select philatelic items and an assortment of branded and promotional items like tote bags to promote our Go Green stamps. Offering gift cards is really a way to offer one-stop shopping for our customer while they're in the post office."
"We are not really looking to become a destination shopping location," he continued. "We're really trying to add that convenience. We know the customers need to come to post offices and, while they're there, … make it more desirable for them to be there and check more than one thing off on their to-do list. It would just make it a better experience for our customers while they are in our lobbies already."
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