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Industry Insight

Neither Rain nor Snow nor Sleet … But Maybe Digital Mailboxes

The spate of winter storms much of the U.

By Cary Sherburne
Published: February 9, 2011

The spate of winter storms much of the U.S. has faced this season has had many postal carriers begging patrons to clear a path to their mailboxes despite the motto attributed to the postal service. But if Zumbox has its way, neither the motto nor the postal carriers may be needed in a future that features digital mail delivery.

We recently reported on Pitney Bowes Volly announcement, and that prompted John Payne, CEO of Zumbox, to give us a call. Zumbox operates the Zumbox Digital Postal System in the U.S. and is already working with DST Output for digital mail delivery. DST is one of the largest producers of transactional mail, producing and mailing nearly 3 billion customer communications annually for some 600 large issuers of transactional mail and other customer communications. Today, Zumbox announced a partnership with Kubra, who, while perhaps not as recognizable a name as DST, supports about 400 large mailers, bringing the Zumbox total in the U.S. to 1,000—a significant dent in the market.

Both Pitney Bowes and Zumbox see the opportunity to help mailers reduce costs by speeding the migration to digital mail. According to Payne, about 15% of consumers have opted for no paper today on some or all of their transactional mail, and about 30% say they have no interest in suppressing paper. “That leaves 55% of consumers and about a $20 billion cost savings for mailers on the table,” he says.

The Zumbox solution allows consumers to aggregate their mail in a secure digital mailbox where Payne asserts that the company will store their documents forever for free, although some premium paid services are available. The service is paid for by sharing cost savings with mailers, who can spend as much as 60 to 90 cents producing and mailing a paper statement, notification or other customer communication. Today, the solution is focused on transactional mail, but Payne claims that by 2012, more marketing mail will be included

Payne is also quick to point out that Zumbox has been operational and available to consumers for some time, while Pitney Bowes reports that Volly won't be available to consumers till mid-2011.

Nonetheless, these types of offerings will clearly provide very acceptable paperless options to consumers, many of whom will take advantage of one or the other … or some other new offering yet to hit the market. The big loser in this transition will be the United States Postal Service, as it sees the volumes of transactional mail continue to decline. In its FY 2009 Household Diary (the most recent available), the USPS is already reporting a nearly 10% decline in overall transactional mail, including a 16% decline in bill payments through the mail—arguably one of the most profitable components of the mail, since return envelopes are optimized for automated processing, and consumers pay full postage rates to mail these payments. In fact, just over 50% of household bills are now paid via the mail, and the average number of bills paid electronically has increased by 20%.

Confirmations, no longer required to be sent via hardcopy mail, reflect a 21% decline in the same period. Transactions sent and received through the mail comprise about 27% of all household mail, according to the USPS, and 59% of household First Class mail—clearly an important piece of the USPS' declining business.

Zumbox, Volly and other digital mail offerings will continue to steepen this decline. There is not much the USPS can do about it … hampered as they are by regulations and their quasi-governmental status. Watch for more bad USPS news as the Postal Service struggles to adapt to an increasingly digital world.

Cary Sherburne is a well-known author, journalist and marketing consultant whose practice is focused on marketing communications strategies for the printing and publishing industries.

Cary Sherburne is available for speaking engagements and consulting projects. To get more information contact us.

Please offer your feedback to Cary. She can be reached at cary@whattheythink.com.

 

Discussion

By Bill on Feb 09, 2011

Just don't get Zumbox. Why would I want a web site to collect all my "transactional" mail -whatever that is. I can just access it through the website of whatever bank, insurance company or utility I need. they already send me emails.

Also - the USPS can easily do this. Surprised they haven't.

No doubt this type of mail is both wasteful and costly, but not sure this is the answer.

 

By Mike Porter on Feb 10, 2011

Good coverage, Cary. As you noted, a decline in the volume of paper bills and payments transported through the mail is going to continue to decline no matter what the Postal Service does.

It seems to me that the USPS would be viewed as a trusted and universally accepted provider of digital mail, should they decide to get into that business. Maybe they ought to license the Zumbox technology.

I think there would be opportunities for the Postal Service to recover some of the lost revenues when paper mail is converted to digital if they played a part in the electronic delivery. The intelligent mail barcode, in conjunction with information received from the electronic mail boxes could help the mail communicate back to the senders. This delivery and open data has some value that could be provided for a fee.

Additionally, a user interface for USPS electronic mailboxes could allow mail recipients to communicate mail preferences directly back to the mailers. There could be opportunities to be removed from a list, changed from paper to electronic, subscribe to new publications or catalogs, etc. The collection and transmission of this information could also be a billable service, in additino to selling ad space on the interface page.

As it stands now, the transaction document volume will decline with no offsetting replacement revenue at all for the USPS. This downward spiral will eventually result in higher prices to deliver postal mail, reduced service, or both.

 

By Cary Sherburne on Feb 10, 2011

Mike, I am not sure what, if any, regulations prevent the USPS from getting into the digital mailbox business. As you know, several years ago, they tried an online mailing solution, but it still ended up with printed mail in the mailstream, and the requirements for suppliers were incredibly complex. The ultimately sold (or gave away, not sure) that technology. In a recent RFI regarding the future of mail issued by the USPS (2009, maybe?)there was no mention of any digital alternatives whatsoever. I am not hopeful they can get their arms around this in any meaningful way, which is good for folks like Zumbox and PB!

 

By Larry Adams on Feb 10, 2011

When email first became popular, there was talk internally at USPS HQ of offering email service through USPS, with a .us domain. Nothing ever came of it because the powers that be at the time were too blind or too entrenched in paper mail to investigate. There was a half-hearted attempt at a service which would guarantee electronic transmission overnight, and next day delivery, to virtually the entire country. I can't remember now what it was called, but it was never promoted, and never really took off before USPS management killed it a couple of years later.

 

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