Article Published in the Philadelphia Inquirer
Having your own zip code is no longer just the punch line to a fat joke.
The U.S. Postal Service has allowed Saks Fifth Avenue to have its own vanity zip code — for the shoe department at its flagship Fifth Avenue store in New York. It was just rechristened “10022-SHOE.” Saks is the first entity to receive such a customized code.
The Postal Service maintains that these last four letters are just a fun, creative marketing strategy and that they have nothing to do with processing or delivery. The agency also claims that there are no plans to allow others to receive vanity zip codes at present. But others have inquired.
As entertaining and potentially beneficial as it may be to have a personalized zip code, this appears to be yet another ill-advised attempt by the Postal Service to masquerade as a corporate entity — wheeling and dealing in the private sector — when, in reality, it remains a government-owned operation.
It was only a short time ago that the Postal Service gave away vast amounts of advertising to Lucasfilms by shrink-wrapping mailboxes around the country to resemble R2-D2, the famous Star Wars droid. Similarly, Saks paid nothing for the rights to the “SHOE” suffix for its neighborhood zip code.
This raises an important question: Should a government agency, such as the Postal Service, engage in what amounts to commercial favoritism by granting special privileges to private firms?
The Postal Service can escape widespread scrutiny for these advertising excursions by not charging for them or by branding them as “culturally significant,” as it did in the Lucasfilms case. But even if Saks had paid for “SHOE,” there’s another problem: Government — i.e., taxpayer — property is not a proper venue for corporate advertising.
Surely, a scandal would flame up if the McDonald’s golden arches were painted on the side of Air Force One. Competitor Burger King wouldn’t be too happy, either.
Logos on the president’s plane might be a stretch, but the principle remains the same — what business does the government have distorting the market with special advertising for selected groups?
In this case, why Saks? Wouldn’t a competitor in the same neighborhood — Bloomingdale’s or Neiman Marcus — have a claim as deserving?
And why has the program started and stopped with Saks? Other businesses hoping to capitalize on the marketing trend started by the New York icon now seem to face a Postal Service uninterested or unwilling to extend the advertising advantage. This lack of transparency in the granting of government property or advantage is troubling.
These ad schemes are just one example of the market distortions caused by the Postal Service’s abuse of its government-agency status. It’s common knowledge that the Postal Service has a government-sanctioned monopoly on the delivery of nonurgent mail. Less recognized is the Postal Service’s exemption from most taxes, including those on its massive real-estate empire. It’s also immune from truth-in-advertising laws. And it doesn’t have to pay parking tickets.
Further, it does not face the same financial reporting requirements as private firms. With its loose accounting standards, letter monopoly, and myriad government perks, the Postal Service has a substantial leg up in competing against private firms — whether vying for market share in the realm of package delivery or advertising.
If a private firm abused its monopoly standing to drum up business in an unrelated sector at the expense of crowded-out competitors, it would be subject to antitrust prosecution. But because the Postal Service is a government agency, such laws do not apply.
Yet the Postal Service asks to be treated as a private business — with the freedom to price its products according to market conditions and to pursue advertising strategies that expand its reach — while refusing to give up the government monopoly and legal protections it claims to need to remain solvent.
Such an approach benefits one group — the Postal Service — at the expense of all others, including the businesses and consumers who rely on competitively priced delivery services.
Saks’ vanity zip code may be an effective — or at least entertaining — marketing tool. But it’s worth pondering whether the agency’s mission of providing universal postal service is best served by dabbling in clever marketing.
Robert R. Schrum is a research fellow at the Lexington Institute.
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