United States Postal Service Thinking Outside The Mailbox This paper will analyze the constraints and opportunities facing the United States Postal Service since development of the email-to-paper system. "The Post Office predicts that in 2003, first-class mail, a $35 billion business and its top revenue-producing service, will begin an unprecedented decline at the hands of booming e-mail and on-line billing services. Under its own online bill system, the Postal Service charges customers $6 per month to send 20 electronic transactions, or $2 per month and 40 cents a piece for unlimited transactions. The e-mail-to-paper United States Post Office (USPS) is 224 year old service that is supposed to run like a business, but is essentially a government agency. It is controlled by a 9-member Board of Governors and a Postal Rate Commission, which authorizes postal rate increases.
Membership to the Board and Commission are by political appointment. Since the days of the Pony Express the Postal Service has played an integral role in the evolution of the nations infrastructure as it searches for more economical ways to deliver the mail. "The Internet is transforming American commerce and already the US Postal Service is playing a role in that transformation" (1999 US Postal Service Annual Report). With the increasing use of the e-mail-to-paper system the Postal Service has been forced, by the new technology, to adapt to the 21 st Century in order to survive. According to the United States Postmaster General William Henderson, "if the Postal Service is not revamped, its ability to deliver mail to everyone cheaply-one of its congressional mandates-is in serious jeopardy. After years of losses, the Postal Service began making a profit in 1995, but net income has dropped every year since" (1999, USA Today).
The e-mail-to-paper proposal, virtually every American would be as signe a free e-mail address corresponding to their street address. Customers could simply link the service to any present e-mail address they have, or opt for a special online postal box. Customers could then get their street address- with "usps. com" tacked at the end (2000 Associated Press). A new study by the Pew Internet and American Life Project (web) found that more than 90 million people have Internet access, of those 84 million use e-mail regularly and 16 million have used some sort of online banking service (2000, Associate Press). Government research indicates that competition from online transactions could threaten the United States Postal Service ability to provide universal service.
"More bills are being sent and paid electronically over the Internet. Such e-payment competition, as well as that from mail parcel companies, is expected to cause an "unprecedented" drop in first-class mail beginning in 2003 (1999 USA Today). Many Americans have grown very comfortable shopping and paying bills electronically and this change in demand has presented the Postal Service with several problems. 1) Declining revenue and 2) obsolete equipment.
The United States Postal Service hold a virtual monopoly on the database of 130 million addresses of US consumers. This monolopy on domestic first-class mail delivery is reinforced with additional benefits. "It doesn't pay corporate taxes or real estate taxes on buildings and owns; it doesn't pay for license plates or even parking tickets and it has access to lower-rate government loans when needed" (2000 USA Today). However, the changing market has critics and sympathizers calling for significant changes that allows the Postal Service to compete with private businesses in the expanding distribution sector well beyond letters and parcels. Representative John McHugh, has introduced the Postal Moderization Act of 1999, which would allow "Un postal commercial activity" to be carried out by a separate, private corporation that would pay rent, taxes, and every other cots Its competitors face" (1999, USA Today). With dwindling profits the Postal Service will not survive without moderization.
The increase of electronic commerce has changed the postage industry forever. John Payne, chief executive of Stamps. com said "by using the internet to deliver postage, we have transformed a centuries old product requiring proprietary machines into a simple service, available 24 a day from any PC" (1999 USA Today). The Internet and e-commerce, specifically on-line shopping has changed the mailbox. "Internet shopping is expected to zoom to the stratosphere. It won't just be books and CD's, we " ll buy from web sites, but toys, groceries, home office supplies, hardware and perscription drugs" (1999 USA Today).
All these merchandise has to be delivered and it does not fit into the traditional mail box that was built for receiving letters. The market shift is estimated to cost the Postal Service $17 Billion in revenue over the next decade; it may have to close Post Offices, reduce hours, increase postal rates and rely robotics to sort the mail. First class mail volume is predicted to peak in 2002 and then decline at an annual rate of 2. 5% from 2003 to 2008 (1999 US Today). The Postal Service already wadded into the brave new world of e-mail in 1998, when it began testing a kind of certified e-mail service called Posters, which sends electronic receipts for contracts ad other important documents transmitted over the internet. Last year, it rolled out its heralded online postage system.
The Postal Service says 280, 000 customers have printed $22. 6 million worth of "online stamps" since July 1999, but the services has yet to deliver a profit. Gene Johnson, chief executive officer of Mail 2000, a Bethesda, Md. , company that translates e-mail messages into first-class mail, said customers would probably find little use for the Postal Service e-mail tracking system, but insisted that reports of the death of first-class mail are greatly exaggerated.
"We really don't see where it's going to disappear," he said. "Even our customers who want their messages delivered electronically, they want to see the hard copy" (2000, The Associated Press. ).