BRYAN YOUNG
The culprit of Netflix’s tremendous paper misuse is its envelope. Although it has an extremely creative design, able to be used for both initial and return delivery, the envelope is unnecessarily large. A 6-inch by 8.25-inch envelope is not necessary for a 5-inch by 5-inch DVD. Netflix even acknowledges the uselessness of the extra three inches as it actually permanently seals off this part of the envelope. It is common for a Netflix subscriber to open his or her mailbox and find this end folded under, as it makes the envelope fit easier in the mailbox. Many people choose to overlook this extra paper because all they really care about is the DVD inside. If one were to stop and think, one might realize that Netflix could help the environment and itself if it reduced the size of its envelopes. Netflix has been delivering DVDs since 1999, and has become extremely popular since then. In recent years, the number of Netflix subscribers has skyrocketed. Netflix started with only about 100,000 customers in 1999. By 2009, the company had increased its number of subscribers to about ten million; and, by the end of March 2010, Netflix was providing its services to fourteen million customers nationwide. Given its rapid growth, Netflix will most likely continue to ship thousands more DVDs every day. The company currently ships about two million DVDs a day, and the average Netflix user rents about six DVDs per month. With those numbers alone, one can imagine how much paper Netflix consumes daily to provide its service. If Netflix were to reduce the size of its envelope to 6-inches by 6-inches instead of the current 8.25-inches by 6-inches, it would be the equivalent to Netflix reducing its deliveries by more than 500,000 DVDs every day. That’s over 500,000 envelopes saved every day, and about 182.5 million envelopes saved every year. It’s clear that, by reducing the size of the special envelopes it uses, Netflix can save thousands of trees every year. This only leaves one to wonder why Netflix continues to produce such large envelopes.
The answer is simple—cost. Today, Netflix spends about seventy-eight cents on postage for each envelope, and the company predicts that it will have spent roughly $600 million on postage by the end of 2010.1 The ideal environmental stance would be for Netflix to completely remove the wasteful three inches from its envelope and, instead, use a square envelope. However, this would cause some problems. For a square, rigid envelope, the United States Postal Service (USPS) charges a twenty-cent nonmachinable surcharge. Netflix ships about two million discs daily and also pays for the return postage for each of its customers; therefore, an extra twenty cents per envelope would cost Netflix $800,000 per day, or $392 million per year. This outrageous postage cost is the reason the Netflix envelope is designed the way it is. Even if it were to account for the money saved from using less paper, Netflix would still see a considerable dent in its profits if it took this environmental stance. There is, however, another option. According to the USPS, an envelope is machinable (capable of being safely sorted by mail machinery) if its length divided by its height is between 1.3 and 2.5.2 The Netflix envelope’s dimensions currently fall within this range; but it could afford to “push the envelope” a little more. If it were to reduce the size of its envelope to 7.25 inches by 5.5 inches, Netflix would be reducing its envelope’s size by about a fifth, the equivalent of saving 400,000 envelopes a day. This would save the company a considerable amount of paper, while still falling within the USPS’s machinable guidelines. This may not appear to be a big change; but with 2 million envelopes being mailed six days a week, the amount of paper saved adds up quickly. The company has redesigned its envelope dozens of times since it started mailing DVDs in 1999 with its environmental impact in mind. Netflix switched from its original cardboard mailers to a thick, paper envelope in 2000, thereby making the
envelopes more recyclable. In 2001, it made a change to plastic to cut costs, but soon changed back to paper again for a more recyclable material. Based on Netflix’s past mailer redesigns, it doesn’t seem odd to think that the company could redesign its current envelope to help the environment, while simultaneously cutting costs. Netflix recycles all of its envelopes, so imagine what it could save if it had 400,000 less envelopes to recycle every day. That’s all money saved without having to pay the USPS a penny extra for postage. It’s even possible that Netflix could end up saving the USPS money by redesigning its envelopes.3 The USPS is an important stakeholder in Netflix’s realm of influence; and, over the past few years, Netflix has been costing the post office a lot of money. Like Netflix, the USPS has a problem when its operations begin to cost too much. Netflix’s current design causes many mechanical sorting problems, mainly due to the extra paper that creates a “floppy leading edge.” In 2007, Scott Mayerowitz from ABC’s News Business Unit reported that Netflix’s envelopes were costing the USPS “roughly $21 million in extra labor costs each year.”4 This is because, as Eric Savitz reported in a 2007 Barron’s article, “70% of DVD mailers processed need to be handled manually because they ‘sustain damage, jam equipment and cause missorts during automated processing.’”5 Back then, Netflix was only shipping DVDs to about 7.5 million customers. By now, that number has almost doubled, and the problem has only been exacerbated. At the time, the US Postmaster General wanted to either disallow Netflix mailers completely or charge the company a 17 cent handling fee per envelope. It is possible that the nonmachinable criteria will be changed in the future to discourage Netflix’s “floppy leading edge.” Such an action would impose a huge cost on Netflix, unless it preemptively redesigns its envelopes. The proposed redesign would cut the “floppy leading edge” in half, to a length that could possibly remove the
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