Postal service getting into gift card business - East Valley Tribune: Business

Postal service getting into gift card business

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Posted: Thursday, June 2, 2011 2:07 pm

The U.S. Postal Service hopes that getting into the gift card business can help change its financial fortunes.

Starting the week of June 20, cards issued by such companies as American Express, Mastercard Discover and Visa will be available at local branches with retail windows, said Julie Utley, customer relations coordinator for the Phoenix Postmaster's Office. The sales will be tested for two years by the Postal Service, which reported a $2.2 billion net loss in the first quarter of 2011.

"The message is that we want to stay competitive, like any business," Utley said. "Offering this convenience to our customers will be another benefit to help us stay in the lead."

In a world of e-mail and shipping competition from such companies as FedEx and UPS, the Postal Service's 171 billion pieces of mail handled last year was a 20-percent decrease from 2006.

But it still carries 40 percent of the world's mail, according to Reuters, which could lead to reliable card buyers at branches, consumer savings analyst Andrea Woroch said.

"The Postal Service is trying to get competitive and modernize strategies and tactics to try and attract consumers," Woroch said. "They have obviously lost a lot of business to technology and e-mail and express shipping services. It's a way to entice people to come back and use their services. It's a creative gift."

During the last Christmas season, more than 75 percent of consumers purchased at least one gift card, according to the National Retail Federation.

Alpesh Chokshi, president of global payment options for American Express, said: "Gift cards remain one of the most popular gifting choices, and as a major issuer of universal gift cards, it seemed natural to make them available in places where consumers can conveniently send and receive mail."

Hallmark greeting cards have been sold at some post offices for years, Utley said.

However, Woroch sees potential hurdles to people flocking to post offices to buy gift cards while they mail packages or check their P.O. boxes.

There will be a convenience charge: $3.95 for a $25 card, $4.95 for a $50 card and $5.95 for a $100 card. Gift cards are available at many grocery and convenience stores. And the Postal Service is not selling them online, where cards can be purchased from among thousands of retailers and such sites as giftcardgranny.com.

"They are missing out on the people who like to use the Internet to shop," Woroch said, "and I don't know how many people will want to pay for a card with an additional fee. It will be interesting to see how it pans out."

Utley said that some cards will be exclusive to the Postal Service, with designs tailored to birthday, thank-you and congratulatory gifts.

"Lots of people come into the post office to do a mailing," Utley said. "We think it's a terrific way to increase postal profit and serve the public with convenience."

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