Money
How Would You Make Over the U.S. Postal Service?
From Inc.com
With bankruptcy looming, the U.S. post office needs a major fix. We asked Inc. 500 CEOs how they would approach the problem
By Darren Dahl | Oct 1, 2009
Everyone agrees that the U.S. Postal Service could do better. With bankruptcy looming, there’s a consensus that big changes need to happen, most involving cutting staff and scaling back services. But what if we could unleash the creative ingenuity of entrepreneurs to improve the post office? We asked Inc. 500 CEOs how they would approach the problem. Here are some of their responses.
The USPS needs a digital mail system. Your physical address could become your username, with the post office allowing you to turn off physical delivery of mail, like banks have done with bank statements. Recipients could choose to have their physical mail delivered to their home mailboxes for archiving once a month. By creating and owning the digital postal service market, the USPS could greatly reduce costs and become profitable, useful, and relevant for the next 100 years.
Aaron Houghton
Chairman and co-founder, iContact
Durham, North Carolina
The mail carrier could do pickups and charge a monthly pickup fee, just like FedEx and UPS, while keeping the letterbox as a free service. Simply adding a $25 monthly fee for businesses that want a daily mail pickup would be something that many businesses would jump on. If you had even 20 percent of the small-business market, you could generate an extra $60 million a year. If the USPS also cut retiree benefits by 40 percent and operating costs by 10 percent, along with raising rates by 5 percent, it could turn a $7 billion loss into a $4 billion profit.
Sandeep Walia
CEO, Ignify
Cerritos, California
Raise the rates on first-class mail. It is the postal service’s core, and it has a monopoly to deliver it. This system actually works and is the most profitable part of the USPS. When the USPS’s first-class rates are compared with those in other industrialized countries, though, they are grossly underpriced. A similar-size letter mailed in the U.K. costs 65 cents versus 44 cents with the USPS; in Germany, it costs 78 cents. Using 2008 statistics, each one-penny increase in the first-class mail rate would add over $900 million in revenue. If you raise it by 5 cents, you add another $4.5 billion.
Harry Geller
CEO, SoDel Concepts
Bethany Beach, Delaware
When it comes to shipping small packages, the USPS is cheaper than its competitors and offers comparable and sometimes even faster delivery times. However, since it doesn’t offer reliable tracking, we pay a premium to ship most of our packages with UPS. If the USPS tracked packages as well as UPS, it could capture a lot of business.
Sean Harper
Co-founder, TSS-Radio
Chicago
The USPS is an out-of-date concept. I don’t think my 18-year-old son has ever written a letter. For him, the post office is about as relevant as cassette tapes, rotary phones, and broadcast television. The USPS doesn’t need to be fixed — it needs to be sold off.
Tony Paquin
CEO, Paquin Healthcare Companies
Celebration, Florida
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Postal Service announces mix of price cuts, increases for 2010
From DMNews: Frank Washkuch November 09, 2009
Less than a month after the US Postal Service announced it will not raise rates for 2010 on its “market dominant products,†a category that includes services used largely by direct mailers and publishers, the agency revealed a mix of increases and rate cuts on other services for next year.
The agency disclosed that the price of a domestic priority mail flat-rate envelope will drop from $4.95 to $4.90, while the cost of a priority mail small flat-rate box will remain at $4.95 for next year.
However, the agency also disclosed that priority mail customers will see an average price increase of 3.3% next year, while express mail users will see prices jump by 4.5% and international shipping services prices will go up by an average of 3.3%. The price changes are effective January 4, 2010. The price of a first-class mail stamp will remain at 44 cents next year.
“The object is always to ensure that each particular product category handles its own individual institutional costs, and I think these prices reflect that,†said Dave Lewin, PR representative for the USPS.
In a frequently asked questions section on the USPS’ Web site, the federal agency explained that prices are increasing due to “the cost of doing business – for things like transportation, utilities and healthcare benefits.â€
The Postal Service told customers last month that it will not raise rates for next year on its first-class and standard mail, periodicals and single-piece parcel post services, although it has said its fiscal-year 2009 mail volume is as much as 20 billion pieces lighter than the year before. Direct mailers told DMNews at the time that the decision not to raise those rates will have a positive impact on mailers. The announcements also come at a time when the USPS is deciding what local postal office branches to close.
Junk mail delivers a sense of satisfaction
From The Chicago Tibune
By
Steve Johnson
Tribune reporter
September 22, 2009
E-mail Print Share Text Size There’s still time to improve my lawn. Public radio needs me to renew my membership. A “quality closet” can be mine for just $495.
And the Lyric Opera, of course, has another great season of songs in foreign tongues and “projected English translations above the stage for all operas,” information clearly worth sending in duplicate.
I’m supposed to hate this stuff. It kills trees, which contributes to global warming, and weakens the grip of the screws attaching my mailbox to my house wall, which leads to stucco failure.
I’m supposed to hate it for constantly nagging me: Buy this, sign up for that, donate to us. And above all, I’m supposed to hate it for having the temerity to try to make me change, in however small a way, the way I lead my life.
But the truth is, except for the rare, genuinely deceptive stuff — credit-card solicitations designed to look like bills — I don’t mind junk mail.
In a “Seinfeld” episode, Kramer once bricked up his mailbox to fend off a catalog onslaught. I open my box to all who care enough to write or, more accurately, stuff an envelope with printed material.
It’s sad psychological comfort, I know, but far better is the day with two credit card offers and a Jiffy Lube coupon than the one with no mail at all.
And in some ways, a Sierra Trading Post catalog is more satisfying than the latest Esquire.
Instead of hanging onto it for a month in hope of finding time to read the carefully written articles, you flip through it in five minutes while waiting for dinner, then toss it on the recycling pile, secure in the knowledge that companies continue to make more hiking shoes than can be sold at full price.
A two-week vacation recently allowed me to revel, upon return, in the full glory of my junk mail.
There, between the rubber bands, were 15 catalogs, four more than the number of magazines, everything from Athleta to West Elm.
There were 25 actual stuffed envelopes of solicitation and such, compared to just 12 pieces of what you would call meaningful mail: utility bills, a library overdue notice, a car registration sticker.
There were another seven pieces on postcards, including, of course, a Bed Bath & Beyond 20-percent-off coupon (I picture cashiers there fainting if someone actually pays full price). And a once-local, increasingly pan-suburban newspaper I no longer subscribe to decided to take a shot and send me a copy.
All told, it was 4 1/2 pounds of clutter. And thumbing through it, opening a piece here, recycling one there, was almost as enjoyable as going through the “real” mail. Sure the junk mailers are after your money, but they’re only asking for it. An actual bill makes demands.
You’d think that junk mail is dying. Beyond the environmental complaints, there’s the relative economic efficiency of spam e-mail.
And although it’s true that last year, for the first time, direct-mail spending actually declined, it’s also true that it continues as a huge business.
I know the statistics (because I looked them up): U.S. junk mail accounts for almost one-third of all mail delivered in the world, and each American household gets an average of 850 pieces of it a year.
Households average 18 pieces of it a week, one survey found, versus one piece of personal correspondence.
I know that not enough people recycle their junk mail, and that direct marketers send out 36 pieces to get one response. I won’t argue that it is all overkill, the sign of a culture with too much disposable income, even now, and too little concern for the ways it chases that income.
But at the same time, junk mail is largely responsible for keeping the U.S. Postal Service afloat; without it we’d have another institution to bail out.
And without all the impersonal stuff around it, the one birthday card in that whole two-week pile wouldn’t have seemed half as special.
Plus, I would have had no way of knowing that I could run an 8K to help abandoned pets, that Clipper Magazine is not about ships or that Trader Joe’s is featuring spicy peanut slaw. Information like that is, literally, priceless.
sajohnson@tribune.com
Plunge in Credit-Card Mailings Slows
Could this be some good news for a change!From Brandweek
Aug 14, 2009
- Mark Dolliver
When the credit crunch took hold last year, it stanched the usual flood of direct-mail credit-card mailings to U.S. consumers. The subsequent meltdown of the financial system had its own restraining effect on such offerings. But now, a report from Synovate says the research firm’s Mail Monitor operation has detected a bottoming out in the volume of such solicitations.
In the second quarter of this year, says the report, households received 349.1 million credit-car offers in the mail. That’s 67 percent lower than the level of mailings in the same quarter of 2008. But it’s down just 6 percent from the level of first-quarter 2009. Some of the big mailers even increased their volume during the second quarter. Bank of America’s mailings were up 77 percent from the first-quarter-2009 level, and Citibank’s were up 65 percent. Noting that credit-card issuers have been growing less risk-averse than they were earlier in the recession, Synovate goes so far as to predict an “uptick” in card offers next year.
An earlier report from Mintel Comperemedia noted a stabilization (after two years of declines) in the number of mailings sent to households promoting mortgages and home-equity loans. But the nature of the offers has shifted, given lessons consumers have learned the hard way in the past year. Notably, direct-mail offers of adjustable-rate mortgages have “fallen out of favor,” according to Mintel’s analysis.
Of course, the fact that companies are making offers of credit cards and loans doesn’t necessarily mean people are taking them up on it. Polls during the past year have consistently found consumers professing their aversion to taking on more debt of any sort. Typical of the genre was a Gallup poll released last month (based on fieldwork in June) in which 46 percent of respondents said it’s “a bad time to borrow money,” vs. 17 percent saying it’s a “good time” to do so.
It’s Time to Stay the Courier
From the New York Times Business Section
By JOE NOCERA
Published: August 7, 2009
Consider the plight of John E. Potter, the chief executive of the second-largest employer in America. On the one hand, he has a guaranteed monopoly for much of his business. On the other hand, monopoly or not, the combination of the Internet and the recession is absolutely crushing his company, just as it is for so many other companies across the country. His last quarter’s results, which were announced on Wednesday, revealed a loss of $2.4 billion. The business is on track to lose a staggering $7 billion in 2009, on around $68 billion in revenue. That’s practically General Motors territory.
What can he do to fix the situation? Surprisingly little. His employees have clauses in their union contracts that forbid layoffs. Nor can he renegotiate their gold-plated benefits, the way, say, the auto companies did when their backs were against the wall. Political pressure makes it nearly impossible to shut down any of his company’s 34,000 facilities, no matter how outmoded or little used. He can borrow money, but under the law, he can add only $3 billion in debt a year — an amount that isn’t going to come close to covering his losses.
Oh, and get this. Every year between now and 2016, he has to put aside over $5 billion to finance health benefits for future employees. You read that right: future employees. There isn’t another business in the country that finances benefits for employees it hasn’t even hired yet.
Welcome to John Potter’s world. He’s the nation’s postmaster general. Yes, that’s right: for the last nine years, he has run the United States Postal Service, which, since 1970, when it stopped being a government department and started becoming self-sufficient, has been the oddest of ducks. It is expected to operate as a business, turning a profit and so on, and yet it is still subject to Congressional oversight and all sorts of legal constraints, like that ridiculous health benefit prefinancing for future employees, which was part of a big 2006 postal reorganization bill. (Its main purpose, it would seem, is government accounting: those funds get counted against the federal deficit.)
Even so, until recently, Mr. Potter had had a pretty successful run. A smart, likable, lifelong Postal Service executive, he got it through the anthrax crisis early in his tenure. He saw it through 9/11 (in no small part by engaging Federal Express to fly long-distance mail during the day, when its planes were empty, something it still does). He has overseen productivity gains and, according to a poll conducted by Rasmussen Reports, a rise in customer satisfaction. Between 2001 and 2006, he even eliminated the Postal Service’s $11.3 billion debt. That year, 2006, was also when demand for mail service peaked, with 210 billion pieces delivered.
But the last few years have been brutal. The Postal Service lost more than $5 billion in 2007, and another $2.4 billion in 2008. And, of course, it is on track to lose that whopping $7 billion in the current fiscal year. (Its fiscal year ends in September.) The amount of mail being sent is dropping like a stone — it will be down to 175 billion pieces in 2009. Mr. Potter has reduced the Postal Service’s head count to 650,000, from 800,000, almost entirely through attrition. He has cut costs every way he can think of. And still the losses mount.
A few weeks ago, the Government Accountability Office added the Postal Service to its list of “high risk†federal agencies, meaning that it is in such dire straits that it needs “to restructure to address its current and long-term financial viability.†Indeed, if something doesn’t change by the fall, the Postal Service will have to renege on those health benefit prepayments — despite its legal obligation to pay them — or start missing payroll. “U.S.P.S. must align its costs with revenues, generate sufficient earnings to finance capital investments, and manage its debt,†the G.A.O. said. Just like any real business would.
“If you are asking me to run it like a business, give me the same tools that someone would have in the private sector,†Mr. Potter said when I spoke to him recently.
But as I discovered on Thursday, when I watched a Senate hearing on the current Postal Service crisis, that’s not likely to happen. For one thing, Mr. Potter isn’t really asking for the tools he needs to turn the Postal Service into a real business. He is asking Congress to relieve it from the health prepayments, which he is likely to get, at least temporarily. He is also asking that the Postal Service be allowed to reduce mail service to five days a week, and to eliminate some postal branches. These aren’t exactly revolutionary ideas — yet they are viewed as highly controversial in Congress, which frets that constituents might get angry if the local postal branch closes.
But even if Mr. Potter were to get his way on these two items, they would still be only stop-gap measures that fail to tackle the bigger question. As the Internet continues to erode the use of snail mail, does the Postal Service’s business model still make sense? Do we even still need the government to deliver the mail anymore?
To me, the answer is obvious: no.
Think for a minute about the mail that comes into your home. In the modern age, very little of it is personal mail. The vast majority is commercial mail of some sort — advertisements, bills, movies from Netflix or catalogs. Once upon a time, said Rick Geddes, an associate professor in the department of policy analysis and management at Cornell University, the postal service was viewed as “a way to bind together the nation. In subsidizing mail service to rural communities you were keeping them connected to the rest of the country.†But today, he added, “it is kind of silly to say we are binding together the nation through advertisements and catalogs.â€
These days, the main justification for keeping the postal service as a quasi-government entity is the belief that no private company would be willing to deliver the mail to sparsely populated rural areas of the country. People fear that it would be a little like airline deregulation: communities that weren’t large enough to justify flights in the newly deregulated environment lost their carriers.
But that mission of universal service has all but blinded just about everyone connected with the Postal Service. Congressmen — many of whom, after all, come from rural areas — are loath to give the Postal Service too much free rein for fear that Mr. Potter’s minions will start shutting down post offices. (Never mind that 2,000 of them serve fewer than 100 people each.) The postal unions, with their no-layoff clauses, have used universal service to justify benefits so generous the Postal Service would save $600 million just by bringing them in line with other federal employees.
As for Mr. Potter himself, while he may want more freedom to run the Postal Service like a real business, he, too, seemed surprisingly wedded to outmoded ideas about mail service in America. “This country needs to have and to protect universal service,†he said. “Our business is all about making sure every American can stay connected with every other American.â€
I failed to ask him the obvious follow-up question: Don’t e-mail messages now do that?
For most of us, of course, it does — and that will increasingly to be the case, as broadband makes it way into, yes, even those rural areas that everyone is so worried about. Michael A. Crew, a professor of regulatory economics at Rutgers told me that that while the Postal Service’s “short-term situation is bleak, its long-term situation is really bleak.†He is one of a number of experts who say they believe that even when the recession ends, the Postal Service’s woes won’t be over. As businesses look to save money in the recession, for instance, they are starting to do end-arounds the Postal Service. Online bill-paying is become ever more popular. Evite is starting to replace mailed invitations to parties. None of that business is ever coming back.
Which is why, instead of trying to find short-term, piecemeal solutions to the current crisis, those involved in managing and overseeing the Postal Service ought to be thinking harder thoughts about blowing up its business model. Maybe the Postal Service should turn itself into a giant outsourcer, handling some tasks but handing out others, for a fee, to more efficient companies. Maybe the government should allow companies to bid on lucrative urban delivery — with the proviso that they also deliver to rural areas. Maybe some areas should get mail deliveries less frequently than others. Maybe there should be radically different pricing structures. Maybe it should even lose its monopoly on first-class mail. I mean, why not?
Mr. Geddes, the Cornell professor, says he believes that the only solution is for the Postal Service to become “just another company†— lose its monopoly, shed its bureaucratic mind-set, become able to negotiate freely with its unions, and answer to shareholders instead of Congress, which is always going to resist significant change that might upset a constituent. Only when that happens will it be able to bring its costs in line with its revenue.
“The post office is not broken,†Mr. Potter insisted. But surely it is. And its current crisis brings to mind Rahm Emanuel’s line that you never want a serious crisis to go to waste.
Alas, here in the middle of its worst financial crisis ever, the Postal Service and Congress seem utterly intent on wasting it.
‘Junk mail’ deliveries drop off: Recession has reduced amount of advertising
From: Business Matters
LAURA RUANE
lruane@news-press.com
• August 3, 2009
If your mailbox is empty more often these days, you’re not alone: Last year saw the biggest decline in U.S. mail since the Depression.
Leslie Alvarez has noticed. “There doesn’t seem to be quite as much junk mail,†said the 47-year-old North Fort Myers resident.
So has the U.S. Postal Service, which doesn’t call anything “junk†mail. Nationally, mail volume fell by 4.5 percent or about 9 billion pieces, year-over-year, in 2008.
The drop-off is steeper in Southwest Florida, said Anne Murray, postmaster for the cities of Fort Myers and Cape Coral. Year-to-date, volume is down about 18 percent. “Southwest Florida is hurting more than some other parts of the country. That’s impacted all of the businesses.â€
Lisa Hixson, a U.S. Postal Service letter carrier for 21 years, delivers mail to downtown Fort Myers’ River District.
On her route, mail volume “has been steadily dropping,†Hixson said. “On one of my streets, I used to have two white tubs (of mail) for two buildings. Now I have one tub for the whole street.â€
To be sure, mailings typically decline when tourists and snowbirds depart for the summer. This is more severe, Hixson and Murray said: It’s the economy cutting into direct mail advertising — fliers, postcards and catalogs.
There’s no single answer as to why. Some businesses — seeking to cut costs and try new media — are redirecting some of their advertising to Web sites, e-mail, and social media tools such as Twitter and Facebook.
Others make direct mailings but are more closely defining their target areas. Some businesses just hope to keep their doors open. Some have closed.
At Central Garage in downtown Fort Myers, “we’re still doing direct-mail advertising, but due to the economy, we’ve probably cut back,†said D.J. Hutton, general manager.
Over the past year, Hutton has supplemented print advertising with e-mailed sales pitches; however, he believes no form of advertising is very successful lately.
“Electronic media is cheap and trackable. You save postage, save paper, save a tree,†said Ludmilla Wells, associate professor of marketing at Florida Gulf Coast University. She noted Southwest Florida still has consumers, however, “who like to hold something in their hands to read, rather than peer into a computer.â€
Postal Officials Ponder Emergency Rate Increases
From the Dead Tree EditionThursday, July 23, 2009
Postal officials are spreading the word that they may seek emergency rate increases next year.
Various scenarios have been bandied about, including one that would raise the price of the 44-cent First Class stamp to 50 cents and other rates by similar amounts. But after several meetings with postal officials, the Direct Marketing Association is telling some members that the Postal Service is more likely to seek an “exigent increase” of only 2% to 3%, including only one cent for the First Class stamp, to help shrink its multi-billion-dollar losses.
Annual increases in most postage rates are generally capped by changes in inflation. Postal officials are realizing that deflation, especially the drop in energy prices since last summer, will probably mean no such rate increases next year, according to accounts coming out of meetings with postal officials. As Dead Tree Edition pointed out recently, USPS will not be able to institute normal rate increases in May 2011 unless the Consumer Price Index rises at an annualized rate of nearly 5% for the rest of this year.
That’s why postal officials are pondering an unprecedented “exigency-based” rate adjustment, which postal regulations allow “only when justified by exceptional or extraordinary circumstances.” Postal Regulatory Commission rules would also require USPS to discuss the circumstances leading to the proposed increases and “whether the circumstances were foreseeable or could have been avoided by reasonable prior action.”
The PRC would hold a public hearing on an exigent rate request and by law would have 90 days to decide whether “such adjustment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain” appropriate service levels.
The Postal Service, which is supposed to break even, is projecting a loss of about $6 billion this fiscal year. To close that gap, which USPS says will grow unless it takes drastic action, postal officials are also discussing plans with mailer groups and postal unions to transition to five-day delivery in the fiscal year that starts in October 2010. That would require Congressional approval.
The closing of thousands of post offices is a possibility, the consolidation of processing and distribution centers has recently accelerated, and USPS continues to shrink its workforce — all in response to declining mail volume that is causing the budget shortfall.
The meetings have also been an attempt by postal officials to shore up union and customer support for legislation that would reduce USPS’ unusually high pre-payments for retiree health care. The Congressional Budget Office estimates H.R. 22 would save USPS about $2.5 billion annually for the next three years.
Can This Life Ring Save the Postal Service?
Editors note: I want to say I am in favor of the 5 day a week delivery. We absolutely still need an efficient postal service and since part of the operating deficit is caused by the decline in mail volumes, it follows suit to reduce the amount of deliveries, in this case, the number of days that delivery occurs. There was a time when the postal service delivered mail twice a day, which was discontinued in 1950 and the world did not come to an end! Indeed, I would say this is a natural evolution and we will adapt, perhaps even finding new opportunities!
By Joe Davidson of the Federal Diary
Tuesday, July 14, 2009
A House committee has thrown the U.S. Postal Service a lifeline, but it won’t be substantial enough to allow the agency to fully escape the financial quicksand pulling it under.
The Oversight and Government Reform Committee advanced legislation Friday that would allow the USPS to pay for the health benefits of current retirees out of its Retiree Health Benefit Fund instead of from its operating budget. That would save about $2 billion a year.
That figure sounds good until you realize that the Postal Service — which is funded by customers, not tax dollars — lost that amount in just the second quarter and expects to lose $6 billion this fiscal year. Changing the funding source of retiree benefits will help, but it won’t stop the recession from sucking revenue from the agency.
Postmaster General John E. Potter says that while he is grateful for the relief the bill would provide, “it’s quite simply not enough.”
The recession has cut deeply into mail volume, damaging the financial stability of the Postal Service. Officials there say a more drastic remedy is needed than what the retiree funding bill provides. Cutting delivery from six days a week to five is the fix they have in mind.
Changing the way the agency funds retiree health benefits, however, does allow officials the ability to continue to fight for the bigger change they insist is necessary.
“Without this legislation, the Postal Service will reach its mandated debt ceiling and could very well have to — inconceivably — end operations,” Bill Krejci, the National League of Postmasters’ legislative co-chairman, said in a message to the organization’s members. The measure, H.R. 22, “would help provide relief for three years, at which time the economy hopefully will be on road to recovery along with the mailing industry. Keep in mind, H.R. 22 alone will not save the Postal Service, but it does provide some ‘breathing room’ and in effect could also be considered a jobs bill as well.”
The current retiree funding mechanism eats up about 10 percent of USPS operating revenue and has become prohibitively expensive, according to Potter. “The Postal Service is the only public or private entity required to prepay health benefit premiums at these extremely high levels,” he told Congress in March.
In fiscal 2007, the first year of the current retiree funding structure, the Postal Service delivered more than 212 billion pieces of mail, and its operating revenue was at its highest point ever: $75 billion, Potter said.
This year, the men and women who haul the bags, push the carts and drive the trucks will deliver only 180 billion pieces. That 15 percent drop in volume resulted in USPS losing $12 billion in income since 2007, William Galligan, a USPS senior vice president, told the committee in May. Yet, while the number of pieces of mail has plunged, the number of addresses served by postal workers has grown by about 2 million.
“In virtually any other industry, this type of income gap could be addressed through price increases, offering new product lines, strict inventory and production controls or changes in service availability,” Galligan said. “For the Postal Service, with a legal requirement to maintain six-day mail delivery, with significant limits on our authority to develop new products, and with price caps that apply to 90 percent of our products, these are not options that are available to us.”
Five-day delivery also is not an option, at least not for the moment. But there is greater willingness in Congress to consider a cut in service that a few months ago was unthinkable for many members.
The agency’s worsening financial picture and polling data indicating that the public can accept five-day delivery “have created a situation where people are more open-minded about moving from six- to five-day delivery,” Potter said in an interview yesterday. A Rasmussen poll in February indicated that 69 percent of Americans would rather cut a delivery day than pay more in postage. A Gallup poll last month found a similar result — 66 percent of those polled favor cutting a delivery day to save the Postal Service money, while 33 percent oppose it.
But while the public largely has no problem with that option and members of Congress are more willing to consider it, the postal unions are determined to fight it.
“NALC will fight any attempt by the Postal Service to convince Congress to make this radical change,” the National Association of Letter Carriers said in a statement. “NALC will proceed professionally and vigorously to oppose the elimination of six-day delivery on its merits.”
But there may be no other choice.
Contact Joe Davidson at federaldiary@washpost.com.
Zumbox lines up partner to launch paperless postal service
| June 9th, 2009
Zumbox is announcing a new partner and a new chief executive today to prepare for its launch of a national paperless postal service.
The Westlake Village, Calif.-based company said it has partnered with ALC, a data marketing service provider, to help launch its system, which lets companies send you bills or friends send you correspondence to a digital mailbox, eliminating the need to send paper letters or bills through the U.S. Postal Service. The company came out of stealth mode in February.
Zumbox has also hired Donn Rappaport, ALC’s own CEO, as its new chief executive. Rappaport will remain chairman of ALC, which he founded in 1978. ALC will help Zumbox with sales and marketing. Maury Friedman, founder and chariman of Zumbox, said the moves represent a new stage of growth for the company. Zumbox will start its national service in September.
Zumbox lets you send or receive scanned, physical representations of letters, bills or other things you might normally send via paper mail. You can log into your mailbox at the Zumbox site and then receive digital delivery of your mail.
And you don’t have to put a stamp on anything. For now, it’s free for everyone except advertisers and marketers, who can pay for premium service. Consumers can now view online the mail they wish to receive and the service allows them to access it from anywhere at anytime via the Internet. And the service doesn’t take a day off on Sundays.
Zumbox has created a digital mailbox for every street address in the U.S. So companies can send bills via Zumbox. You open them and they look like scanned versions of the real paper bills. The Zumbox site will let you look at a variety of media in the form of HTML, Flash, audio, and video. Nonprofits, businesses, government entities and consumers can use it for free.
Zumbox mailboxes are secure, since the company uses a closed system with security measures that meet the toughest regulations, such as the medical-record HIPAA law. Users get a secure PIN number, which they receive from Zumbox via paper mail, just to make sure that scammers don’t hijack your mail. The benefit of the closed system is there’s no junk mail. Consumers can still order and use a variety of electronic payment systems. They can also browse through the catalogs they want to see and order goods.
Zumbox will charge advertisers and marketers because it gives them real-time campaign measurement tools that are unavailable through traditional mail. Marketers and advertisers can also send mail to a single address, a mailing list, or a specific geographic region such as all of the homes in a specific zip code.
The company was founded in 2007. It has 33 employees and has raised $4 million from private investors. Rivals include Earth Class Mail, another provider of alternative mail services.
Threat to shutter N.Y. post offices is pushing the envelope
Sunday, June 7th 2009, 4:00 AM
There’s no reason the United States Postal Service should be going broke – but it could end up that way if its managers, including politically motivated members of Congress, don’t wise up.
Countless stories have reported a $6 billion deficit at the postal service, usually ascribing it to the skyrocketing cost of fuel, the increased use of e-mail and the effects of a weakening economy.
There’s no question that the economy is taking a heavy toll. In a recession, it’s natural that businesses – the main users of the mail – send out fewer sales promotions and ship fewer goods. And the national wave of foreclosures means hundreds of thousands of addresses have become vacant places that don’t send or receive mail.
The growing gap between revenues and expenses is cited to explain 25,000 recent layoffs and a shrinking of the mail network that could include 20 shuttered branches in New York City alone. Even with the recent 2-cent increase in the price of a first-class stamp, postal officials still talk about the need for more layoffs, and keep floating the idea of reducing delivery to five days a week.
The doomsday talk is premature. Even though more people use e-mail, the postal service delivered a record high 213 billion pieces in 2006, well into the digital revolution. Even online shoppers have to get physical goods delivered to them, and that usually means a visit from the postman.
In reality, the $6 billion deficit is a burden dumped on the postal service by Congress. By law, the postal service must use current dollars to pre-fund future employee health and retirement benefits, a financial shackling that turns what ought to be a surplus into a deficit.
Before the pre-funding law was passed in 2006, the postal service had fallen behind on paying benefits. That problem, however, has been fixed. A bill currently before Congress can – and should – be passed to eliminate the deficit by relaxing its benefit payment schedule.
But that may not happen. Congress has been horribly slow at correcting problems like the benefits snafu – yet adamant about imposing tough, expensive mandates on the postal service.
Take universal service, the congressionally imposed mandate that mail get delivered six days a week. Despite polls showing that most Americans are willing to live with weekday-only service, a key congressman – Rep. Jose Serrano of the Bronx, who chairs the powerful Appropriations subcommittee that funds USPS – has declared that universal service is here to stay.
“People depend on regular mail delivery and would be greatly inconvenienced by missing a day’s delivery,” he told the Washington Post. “The Postal Service must manage its operations in ways that will not cause consumers to miss out on mail service.”
If only that tough approach were applied to other parts of USPS, like the outrageous salaries paid to top management.
By law – in yet another congressional mandate – the postmaster general’s pay is capped at 20% more than the salary paid to the vice president of the United States. But Postmaster John Potter got around that by adding performance bonuses and other benefits to his $265,000 salary, so much so that his true 2008 compensation was worth $850,000. Deputy Postmaster Patrick Donahoe did pretty well, too, taking home more than $600,000 on a base salary of $238,654.
The lavish packages were approved by Congress, before public outrage led to vows of an investigation by the very same lawmakers.
Potter defends the high pay as appropriate for executives running a $70 billion corporation. That would hold more water if he and his team weren’t so committed to slashing jobs and service levels.
America needs a reorganized postal service that either operates like a truly independent corporation or returns to its roots as a government agency. Today’s hybrid arrangement might satisfy Congress and the postal top brass, but it isn’t working for anybody else – especially the public.
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