Finland Post faces tough slog with Digital Mailbox

Finland Post is scaling down expectations for its Netposti digital mailbox service and has discontinued some of the value-added services surrounding it.

Netposti, which debuted in January 2001, lets consumers specify what mail they want to get electronically and what on paper. It's free to consumers. Senders pick up the tab. Finland Post officials say consumers have embraced the service, just not enough of them. After an initial burst, enrollment slowed down.

The post signed up about 150,000 people in the first 20 months but in the following 20 months it only managed to recruit 61,000 for a total of 210,000 users.

"It's not growing as fast as we hoped but growing," Netposti product manager Kati Nevalainen says.

Response from senders has also been lukewarm lately although things are supposedly looking up. Currently 82 mail senders are reportedly in production and the post expects another 18 to be up and running by the end of the year. The incentive for using the service is that it's cheaper than sending out regular paper mail.

For the post, there are substantial cost savings involved if more people opt to get their bills, statements and pay slips electronically. According to Nevalainen, consumers are happy with the overall service but are disappointed with the limited number of senders.

Of course, not all of the 210,000 registered users are active. Finland Post estimates that about 50,000 are active. An active user is described as a subscriber who has opted to accept at least one letter through Netposti.

Netposti is integrated with the post's MultiLetter program, which lets senders dispatch an electronic file to the post, which then distributes it electronically or on paper depending on customer preference.

Some three million letters are delivered monthly through the MultiLetter program and most are delivered on paper. The monthly transaction volume of electronic messages Netposti delivers is put at a little under 100,000.

Finland Post says that registered consumers discover that the senders they get their bills from aren't part of the Netposti circle.

The post is caught in a chicken-and-egg situation – senders would be more enthusiastic about joining Netposti if there were more consumers and more consumers would sign up and start getting mail electronically if some of their important senders were on the service.

For instance, the capital city of Helsinki is still not sending through the service although smaller cities such as Turku and Imatra and companies like Sonera are.

Despite slow sender adoption, Finland Post has not cut its prices. Nevalainen argues that price cuts won't spur billers/mail senders to jump in. She says that once mail senders implement B2B e-bills, they'll be more responsive to the notion of sending B2C e-bills.

To spur adoption, the post is striving to get companies to send their pay slips through Netposti. It figures pay slips would get both senders and recipients on board.

On the consumer side, the post says it's working hand-inhand with mail senders to get the word out to potential users. Meanwhile, because of low usage, the post has discontinued some of the value-added services that were offered to Netposti subscribers for a monthly fee. Apparently only a few thousand people signed up for the fee-based services.

The scrapped services were an e-mail, address book, maps and SMS messages bundle. Finland Post used to charge three euros a month ($3.59) for the package but the rate of adoption didn't offset the costs incurred in providing it. The number of subscribers "was far too little when you think about those costs," Nevalainen laments.

An e-post card service offered to Netposti subscribers has also been discontinued though it's still offered separately through Finland Post's web site.

Netposti isn't profitable and won't be for another three or four years. The original date for it to become profitable was January 2003, which was then pushed out to August 2005. Going by current projections, it won't be in the black until '07 or '08.

Consumer enrollment targets have also been scaled back. By 2007, the post anticipates having 500,000 registered users instead of the original goal of 1.5 million. Explaining the new targets, Nevalainen says the post realized that people's behavior isn't quick to change.

Finland Post declined to disclose Netposti's revenues. Slow growth notwithstanding, the Finland Post is still optimistic that Netposti will ultimately succeed. "I think it's a matter of time actually," Nevalainen said, adding that maybe it was a bit ahead of its time.

Finland Post's experience mirrors that of several postal organizations that jumped online only to discover that their initial business projections were too optimistic. For instance, the US Postal Service killed its e-bill service in November after it failed to gain momentum. The initial projections made by Canada Post's epost joint venture were also too rosy.

Finland Post's Netposti service is available in both Finnish and English.