I don't really understand how a 90% decline in letter volume equates to a 100% decline in letter delivery. I mean, I understand that people are bad with their money, and don't want to do stuff. But 10% of a very large organization is still a large organization. And post offices provide a network of last resort to everyone in the country. I think this is a mistake.
Economy of scale. When you deliver letters to almost every house, often multiple letters to the same house, it is FAR more economical to deliver them than delivering one-offs spread out across a large neighborhood.
It would take a delivery person 30 seconds to drop 5 letters in your mailbox and five in your neighbors slot, which would be more than covered by the price for 10 stamps. If it takes several minutes to hand deliver your single letter and drive two blocks to deliver another single letter to the next person, the cost of those two stamps will NOT cover the salary+benefits for the person who had to take the time to do the delivery.
And those costs really spiral out of control once you start including rural areas where the distances between houses are much larger.
virtually no one would be willing to pay the true cost of those deliveries, which means that it simply isn't economical to continue delivery once the volume gets too low.
Disc space -- the final frontier!