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US Postal Service digital strategy “not ready for prime time”

Monday, May 9th, 2011

Delegates at last week’s National Postal Forum hoping to hear of US Postal Service plans for digital mail services were disappointed to hear only references to “work in progress”.

Among the array of ideas for furthering the physical mail in the light of declining volumes in the financial powerhouse that is First Class Mail, USPS executives revealed that they were in the process of drawing up some kind of digital strategy.

But after months of innovation symposia and meetings with experts, chief marketing/sales officer Paul Vogel said last week: “The digital strategy is not ready for prime time.”

Discussing the issue in an executive briefing at the event in San Diego last week, Vogel said there was “no clarity” over the digital strategy as yet, but said his team was currently sorting through it “as we speak”.

Yet the view on the US Postal Service’s potential opportunities in the digital world appeared anything but positive. Vogel told his audience of postal staff and USPS customers: “We’ve been talking to other Posts about this and they are telling us they have all lost money on it.”

John Callan, a consultant who contributed to the recent Office of the Inspector General (OIG) report recommending the USPS get involved in digital communications services, said he believed it was “completely untrue” to say that other Posts were losing money on electronic mail systems.

“Italian digital products definitely make money. It’s in the single digit margins, but that’s what they make on conventional mail, and of course USPS is losing money on conventional mail, so to make a few cents alone is better than losing money,” Callan said.

“I understand that Finland post, Itella, through their NetPosti product is making money and I certainly imagine Deutsche Post DHL’s net post product, ePostbrief has got to be making money, they’re charging the same for it that they’re charging for mail.”

“I’m sure it’s not knocking the doors down with volume, but it’s not terribly costly to provide this service once you have established it,” added the Connecticut-based consultant.

“Defensive strategy”

Speaking to Post&Parcel last week in San Diego, US Postmaster General Pat Donahoe said there was “some interest” in providing a digital communications service, but also appeared to dampen expectations.

He said:  “We want to be there, perhaps in the next couple of years – it’s not something that will make up for the loss of First Class Mail, but we’ll be there. More of a defensive strategy, though.”

Mirroring some of the views of the OIG report, Donahoe said the key benefits that the US Postal Service would bring to a digital platform would be security and law enforcement – postal activities in the US are patrolled by the Postal Inspection Service, one of America’s oldest law enforcement agencies which works closely with the police and FBI.

But after the USPS itself was targeted by hackers in recent weeks – through its RIBBS customer service portal – as well as a high-profile attack on the likes of Sony’s PlayStation Network, Donahoe was cautious of the dangers in cyberspace.

“There’s a lot of really bad things out there. We have to be very careful in getting into that.” He said of digital postal services: “On the one side, it’s really convenient – but what happens if someone gets a hold of your laptop?”

Donahoe said his team had spoken to other companies regarding the potential for working with the USPS on a digital platform, highlighting Pitney Bowes’ Volly service and Seattle-based Earth Class Mail as companies that have already made the leap into digital post offerings.

“We would probably see what the best industry solution would be,” he said.

Callan, who is the creative force behind a major conference next month, which is looking at the long-term future of the Postal Service, said: “Rather than defensive, they at least ought to be working towards transitional strategies, as is expressed in the OIG piece.

“I think they need to think about themselves as a platform – not so much as a competitor, but as a platform to continue to enable communications and transaction and advertising applications and behave or act more like Apple with their iPhone and iTunes service.”

The Postal Vision 2020 conference, being run with the mailers’ association PostCom in the Washington DC area on June 15, is set to bring in the thoughts of digital experts including Google vice president Vint Cerf, one of the original architects of the internet.

“A digital strategy is not something to be created in a vacuum, and this is why I feel the need to bring the digital world into the discussion,” said Callan.

Source: James Cartledge, Post&Parcel

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