Sunday, February 21, 2010

Coinstar by Mail: Could It Work?

CC photo by justj0000lie on Flickr.

Coinstar kiosks can be seen in grocery stores nationwide, converting coins to cash vouchers. For many people, the convenience of dumping a jar of coins into a machine is well worth the 8.9% counting fee to avoid the chore of counting coins by hand, wrapping them, and bringing them to the bank. Customers can also avoid the fee by instead getting a gift certificate for the full amount to one of several retailers. 

Could Coinstar take convenience one step further? Why should customers go to the grocery store when they could mail their coins directly to Coinstar? If this sounds absurd, let's not underestimate American laziness. Many people would rather order a book from Amazon than pick it up at their local bookstore, even if it means waiting a few days. Brick and mortar video rental stores like Blockbuster are in danger of becoming extinct because so many people would rather mail their DVDs back and forth to Netflix. So why not mail coins?

Would this be cost effective? The biggest USPS flat-rate box available measures 12" x 12" x 5 1/2", or a volume of 792 cubic inches. It ships for $14.95 domestically (the price includes the cost of the box), and there is a weight limit of 70 pounds.

The number of coins that can fit into such a box is restricted both by weight and by volume. To get a rough estimate, let's consider that a quarter has a diameter of 24.26 mm and a thickness of 1.75 mm. This translate to a volume of 0.0493 cubic inches per quarter. This volume divides into the box volume 16,000 times. So 16,000 quarters could theoretically fit, if we ignore weight considerations and the fact quarters are round and thus would not stack evenly.

A quarter weighs 5.670 grams, and thus 5,600 quarters would weigh 70 pounds. This amount of quarters would easily fit into the box, as demonstrated above, so the maximum amount of quarters one could ship in such a box is 5,600 (worth $1,400).

A Hungarian mathematician has calculated the distribution of coins in an average coin jar. He concludes that the average value of a pound of random coins is $12.96. About 100 coins weigh 1 pound. So theoretically anything between 150 coins (enough to cover the cost of the postage) and 7,000 coins (the most that will fit in the box) would net the customer a positive return and, if the coins number in the thousands, a substantial return ($12.96 per pound times 70 pounds is $907).

Coinstar could send a flat-rate box to customers relatively cheaply but insist on prepayment of the return shipping, so that only those with enough coins will request a box. Enough people might be willing to pay for the shipping if it means getting hundreds of dollars back for their coins; a fee of $14.95 quickly becomes less substantial in percentage terms as the number of coins grows.


Josh Hattersley said...

Oh gawd. I leave for the weekend, and when I return your blog has turned into a green monstrosity. Is your blog the hulk, and did it become angry? In any case, we need to have a serious chat about your design, and I will quite likely need to "massage" your stylesheets into submission.