Shutting Down the United States Postal Service Would Be a Disaster for Small Food Businesses
Even as the government rejects a bailout, mail-order businesses still rely on the post office's affordability and access to a larger base of customers.
The post office might seem to be an unexpected casualty of the coronavirus pandemic, but it has warned U.S. leaders that it could run out of money by September. The USPS is in dire straits, and the White House seems uninterested in helping.
There’s never a good time for the post office to go under, but now is an especially rough time. Along with the American public, tons of small businesses rely on the post office to deliver products directly to customers.
This week, Sprudge, a coffee industry news site, reported that a Postal Service shutdown could hit small coffee producers especially hard. Most rely on affordable flat rate shipping offered via USPS to deliver orders to customers.
Eileen Rinaldi is the founder and CEO of San Francisco’s Ritual Coffee. The company started in 2005, and until recently, employed 80 people. It operates six cafes, five in San Francisco and one in Napa, and sells to cafes, restaurants, and grocery stores nationwide. Even at Ritual’s size, the business is heavily reliant on USPS. Rinaldi said she’s tested out plenty of options since launching an online store in 2007. “The USPS is consistently the most reliable and cost-effective, especially for small packages, like a single bag of coffee,” she said.
Right now, it’s even more important. Last year, mail order and direct to consumer sales were just four percent of Ritual’s business. This month, they’ll make over a quarter of it. “Mail order is up about 400 percent, she said, “But the other channels are way down, so it's a bigger piece of the pie.” The company is spending about $8,000 a month more for shipping than it was in January. Rinaldi estimated that well over half of that amount goes to the post office.
Mail order shipping has become a lifeline for small businesses. Caroline Cotto and Claire Schlemme started Renewal Mill, selling okara flour—a flour made from a byproduct created during soy milk production—in 2018. The company has since added other products, including chocolate chip cookies.
Pre-COVID, they sold direct to consumers through Amazon and their website, but the majority of their sales were through foodservice and other retail channels. Now, with sales of shelf-stable baking mixes rising, the company is selling about 80 percent of its product directly to consumers.
Fallout from the coronavirus pandemic made it especially challenging for the company to launch its new brownie mix. Retail stores are focused on stocking their current products, Cotto said, and less interested in adding new ones. Without the promise of grocery store shelves, direct consumer sales have been their main channel, and the USPS their main shipping option. “If the Post Office failed, we’d have to mark up prices significantly. It could make us noncompetitive in the market,” she said.
“If we lost the USPS in general, but especially in these current times, it would be devastating for us. We do not have the runway to be able to buy new materials for shipping with a new partner nor can we afford their rates,” said Stephen Beaumier, founder and CEO of small-batch chocolate companies While Label Chocolate and Mutari Chocolate.
“We use USPS because it's 25 percent of the cost of UPS. Sending a one-pound package to California could cost $20 with UPS, which is the cost of a 3-pack of [our] kelp jerky,” said Courtney Boyd Myers, co-founder and CEO of Akua, which sells vegan seaweed jerky. It's just not feasible for us.”
Ori Zohar, co-founder of single-origin spice company Burlap & Barrel, says extended time at home has shifted his customer base from restaurants and food producers to home cooks. That’s the good news. The bad news: small orders for at-home cooks mean the company is even more reliant on the postal service. “We spend more than $10,000 with the U.S. Post Office each month. The USPS allows us to reach remote places across America and Canada and even overseas military bases. They deliver to places where UPS and Fedex can't or won't.”
So many small food retailers feel similarly, repeating the same The post office is effective. It’s affordable. It goes places others don’t. And without it, the door is wide open for Amazon and other private companies to box out small producers.