Is No Saturday Delivery and Hybrid Mail the Solution to the USPS’ Problems?
By Gail Nickel-Kailing on March 2nd, 2010
“If mail service fails to improve, 60% of mail will be delivered electronically by the year 2000” (Wall Street Journal, 1987)
“Electronic mail … could replace 25% of snail mail by 2000” (TIME Magazine, 1998)
“E-mail is disrupting postal services. The volume of personal communication that is done by letter is dropping precipitously, leaving postal services with magazines, bills and junk mail.” (Clayton Christensen, “The Innovator’s Solution”, 2003)
“The number of letters sent in individual pieces is dropping at an accelerating rate. Any grade school kid knows why: Nobody sends letters anymore; everybody uses e-mail.” (Rick Geddes, “Thinking Outside of the Mailbox,” The Washington Post, August 29, 200)
(From Is There a Future for Mail? Presented to the Postal Rate Commission, 2/22/06, by Luis Jimenez, SVP and Chief Strategy Officer, Pitney Bowes)
For the last 20+ years people have been expecting digital delivery of personal and promotional messages to be a challenge to the “monopoly” held by paper mail, but none of them reckoned with the recession that hit us in the middle of 2008.
- USPS Mail Volumes and Delivery Points
This chart is taken from the Postal Service’s 2009 Annual Report, and it shows a drop of about 17% of mail volume over the last 5 years, while the number of delivery points – homes, businesses, PO Boxes – increased by 4%. Mail volume is expected to drop to 150 billion pieces by 2020. The remaining volume is likely to have a much higher percentage of promotional mail and a decreasing amount of First Class mail.
How is the Postal Service dealing with these changes? The USPS is renewing plans to end Saturday delivery and to ask for an “emergency” rate increase. Other strategies include closing post offices and increasing postal stations in retail stores, such as groceries, big box stores, and pharmacies; extending the delivery standards from 1-to-3 days to 2-to-5 days for First Class mail; or adding hybrid mail services.
Death Spiral?
More and more financial institutions are pressuring their customers to choose online banking and digital statements; ostensibly to “save trees,” but in realty, to cut the cost of producing and mailing statements and managing paper payments. Advertising and promotional messages are continuing to move online as search engines and other online advertising is becoming more and more targeted. And increased postage is simply causing businesses to cut back on direct mail because of cost. As the USPS continues to cut back on services and increase postal rates, electronic alternatives continue to grow.
Hybrid Mail Services
Hybrid mail is a process that turns an electronic message into a physical mail piece that is this printed and distributed through a traditional postal service. By 2004, 63 countries offered a form of hybrid mail, according to the Universal Postal Union, representing 30% of all posts. More than 2 billion pieces of mail were produced and distributed using a hybrid mail system.
Hybrid mail services are outgoing electronic-to-print systems; Click2Mail is a commercial hybrid mail solution.
- Click2Mail Workflow Process
Digital Mail Room Services
A “reverse hybrid mail” system, digital mail room services, accepts printed mail and converts it into electronic mail. There are systems designed for enterprise mailing centers, such as those offered by Océ Business Services – which recently launched its Océ Digital Mail – or MailSurity, a company that has provided digital mail centers for almost a decade.
- MailSurity Workflow
Digital mail services for consumers and small businesses are available from Earth Class Mail. All mail is delivered to Earth Class Mail, the containers (envelopes/boxes) are scanned and the physical pieces are stored. The recipient has the option, upon receipt of the image, to determine whether the physical piece should be opened and scanned, delivered without scanning, or destroyed. The system drastically cuts down on the amount of physical mail that is delivered to the final recipient.
Digital Postal Services
A service that combines street addresses with email addresses, Zumbox, offers a completely digital alternative to paper mail with the benefit to mailers of using existing postal addresses. One of the key challenges to direct marketers is the dearth of good quality email address lists. Zumbox has converted all the street addresses – more than 150 million – to “Zumboxes,” which are essentially private email boxes. The recipient enters their street address and views facsimiles of the envelope and contents on the screen, exactly as they would look if delivered on paper.
- Zumbox Process
Conclusion
Increasing costs and expanded electronic alternatives will continue to challenge the USPS and increasing postage will challenge mailers. Print and marketing service providers have the opportunity to add value to print and keep it in the delivery stream. Careful management of mailing lists will reduce distribution to customers and prospects that are not good targets for promotional messages.
A balance between online and offline campaign elements will encourage mailers to use all the alternatives available, to use direct mail when appropriate and electronic distribution as an alternative. Use all the communication systems to reach prospective buyers with the right message at the right time for the right product at the right price – through the right distribution channel.
2 Responses to “Is No Saturday Delivery and Hybrid Mail the Solution to the USPS’ Problems?”
By Brian on Mar 2, 2010 | Reply
Well, considering what the post office pays it’s carriers, they were doomed to fail sooner or later, with or without email. Post office employees have some of the best benefits of any jobs around. Government jobs are one major reason why government costs are spiraling out of control in most local governments and national as well. For other green topics visit Green Planet Ethics.com
By Bob Raus on Mar 4, 2010 | Reply
The post office has been doing a great job of putting themselves out of business for at least the past decade betting that they are too big and central to the US way of life to fail, not to mention that it was created and explicitly authorized in 1792 in the US Constitution (http://en.wikipedia.org/wiki/United_States_Postal_Service).
The fact is that the US economy relies on the USPS to keep commerce moving. While electronic statements, bills and payments are hyped, marketed and pushed by nearly every B2C company in the US under guise of being environmentally friendly, there is also a quiet ground swell resistance to not receiving mail. Mail is simply something that transcends the daily electronic barrage of information. Receiving a letter, card or catalogue is approaching a novelty today and novelties get noticed and acted upon – while items in email inboxes are easily lost, deleted or never read. In other words, when it matters – it is printed and mailed.
A recent article on the Mid-Volume Transaction Output Movement (MVTO) blog (http://www.outputlinks.com/mvto) uses the Toyota safety recalls to illustrate and define the top 5 reasons why critical information must be printed and mailed. It’s clear that we need the USPS, but that it also needs to be updated and revamped to become fiscally viable.
The driver for eliminating Saturday delivery is a real reduction in the volume of mail pieces. Dramatic and frequent postage rate increases have forced people to look for an alternative. The catch-22 is that lower volumes translate into higher postage rates. Higher postage rates in-turn, result in lower volumes. Who wants to pay $120-$200 a year in postage to mail bills??