An Interactive Stamp of Approval

Postal Service Bets on New Media to Stave Off Electronic Competition

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The U.S. Postal Service, known more for its plodding bureaucracy than its aggressiveness, is turning quickly toward the interactive world to avoid being stamped out.

The nation's mail delivery service is participating in a variety of experiments to determine its role in a future that could very well be dominated by electronic mail, fax and other paperless forms of communication. The experiments range from selling stamps through interactive TV to overnight delivery of home shopping merchandise.

The postal service also is looking at ways it can protect the privacy of electronic mail and provide universal access to the information superhighway through its 40,000 post office facilities.

Such an aggressive stance is surprising, but the postal service has good reason to attempt to be an innovator in electronic communications. While overall mail volume is growing, its share of the correspondence and transaction market fell from 77% in 1988 to 68% in 1991 and an estimated 54% this year, according to postal service research.

New technologies already are siphoning off mail volume and will only get more sophisticated.

"The risk to the postal service posed by competition and changing technology is very real," said Michael Motley, associate director of the General Accounting Office in testimony last month before the House Committee on the Post Office and Civil Service.

Volume losses, especially in business mail, threaten the postal service's very existence. And as embarrassing delivery problems and customer satisfaction woes surface in Chicago and other markets, calls for sweeping reform of the postal system are growing louder and louder.

But the postal service insists it will adapt with the changing technology, just as it survived the invention of the telegraph and telephone.

"We see ourselves participating in the superhighway," said Robert Reisner, hired in December to lead the postal service into the interactive future as VP of the technology applications group. "As Mark Twain said, `The report of my death was an exaggeration."'

Postal service experiments include:

Interactive TV. A virtual post office will be created on Time Warner's Full Service Network in Orlando, slated to start in the fall. Customers will be able to order stamps and mailing supplies that will be delivered the next day by the local postal carrier. Information on how to mail letters and packages will be provided on screen.

The postal service also will test overnight delivery of merchandise ordered through on-screen shopping services.

Local merchants will ship merchandise to a centrally located warehouse, where the postal service will pick it up and deliver it to customers. The service will be touted as faster and cheaper than parcel delivery and could be expanded nationally. Wunderman Cato Johnson, New York, is working with the postal service on the Time Warner test.

"We want to capitalize on the strength of our delivery force, which visits every household almost every day," Mr. Reisner said. The service also has the added convenience of allowing people to avoid visiting their post office, a task many dislike.

"I think [the postal service] has found an application so perfect you know it will work," said Greg Stuart, VP-director of interactive marketing at Wunderman.

Business reply card scanning. This service would electronically transmit business reply mail, speeding delivery by at least two days. This allows the postal service to "add value to a product we already have," Mr. Reisner said.

The postal service hopes to test the concept in a few months.

Electronic mail certification. "We all take it for granted that when we seal a letter and drop it in a mailbox, it will make it to its destination unopened. We intend to keep it that way, regardless of the medium," Mr. Reisner said.

Federal information kiosks. The postal service is working with government agencies to explore developing a kiosk information center, similar to what has been developed in California and Texas, to make all government services more accessible to the public. This could include job bank listings, electronic benefits transfer and interactive communications with government agencies.

Postal officials are getting input from 30 federal agencies and will publish a report on its findings in September.

Universal access. The postal service is studying ways to make post office lobbies universal access centers to the electronic information superhighway. This service could be combined with the federal information kiosk or made available through some kind of electronic network service.

Research. The postal service is one of several companies shelling out $75,000 to sponsor the Electronic Access Project, an ambitious six-month media research study to try to determine what consumers really want from interactive media and what suppliers can deliver (AA, May 16). Other participants include BellSouth Corp., Fidelity Investments, Prudential Securities and U S West.

The postal service is wise to pay attention to the competitive threat, observers say, although whether its efforts will succeed remains to be seen.

"The postal service is trying not to make the mistake of the railroad industry," said Gary Arlen, president of Arlen Communications, a Bethesda, Md., consultancy. "The railroads thought they were in the train business, not the transportation business. The postal service doesn't want to make the mistake that it is in the mail business, but in the communications business."

Still, many think the postal service should develop a long-range plan to deal with an inevitable decline in volume.

"They can talk all they want about grand schemes and on-ramps to the information superhighway, but the reality of the situation is the whole regulatory framework constrains the postal service to its core business and gives competitors an advantage," said Gene Del Polito, executive director of the Advertising Mail Marketing Association. "They need a strategic plan to define mail's role in 20 years and what kind of postal service we'll need and then send this information to Congress to develop laws and regulations."

Earlier forays into new technologies have not all been successful. The postal service last fall halted a rollout of interactive kiosks that dispensed stamps, change of address cards and business cards, citing poor revenues and faulty equipment.

The postal service must also stave off criticism that it is spending money on technologies that may be of limited use, at least in the short term. The Time Warner system, for example, is charging advertisers $200,000 to participate in its test. The postal service said it is spending less than $500,000 on interactive media research and development this year.

Some say the postal service should in fact cut costs to prepare for volume declines.

"The universal nature of the system is extremely important," said Michael Cavanagh, president of Cavanagh Associates, an Arlington, Va.-based mail and technology consultancy. "But it doesn't make sense at all to go door-to-door. Why not cluster [mail] boxes at the end of the street?"

Interactive or not, no one thinks the postal service will become extinct-at least not any time soon.

"I don't see the postal service becoming extinct any time on the horizon," Mr. Cavanagh said. "I do not see people abandoning magazines, newspapers, occasional notes, greeting cards and hard-copy business communications. We're talking about a $50 billion-a-year institution."

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