The Value Of Zip Codes

April 25, 2013 in Daily Bulletin

How much is the value of the zip code system of the United States? Niraj Chokshi looked at a study that tried to answer the question:

  • According to a report by the U.S. Postal Service Office and IBM, the zip code system is worth $9.5 billion a year.
  • $2.2 billion of that value goes to the postal service, $2.1 billion to firms who use it for mail-related products, $2.4 billion for firms that use it for non-mail products, and consumers, governments, and non-profits gain $2.9 billion.
  • The zip code isn’t an American invention – Germany had the first modern zip code system in 1961, and it didn’t come to the United States until 1963.
  • The primary challenge when setting up the system was ensuring that there was a high rate of adoption. AT&T warned the post office that their experience with implementing area codes for telephones indicated that implementing zip codes would be an uphill challenge.
  • A massive advertising campaign ensured that the system had near 100% adoption within 20 years.
  • The next evolution for the zip code might be the addition of longitude and latitude coordinates. Even a 1% improvement in zip code data could yield $33 billion in benefits.

Read more about the study, its limitations, and the mysterious Mr. Zip who made the American zip code system possible over here.

Source: The Atlantic