Fixing the United States Postal Service

The Governmental Accountability Office (GAO) announced earlier this year that the United States Postal Service (USPS) was on track to be $7 billion in the red for 2009. This on top of $10 billion in debt and a projected $1 billion cash shortfall. The GAO has placed the USPS on it’s high risk list, saying that the federal postal system was in desperate need of transformation. As one would hope, the USPS leadership is scrambling to make changes and close the financial gap. Unfortunately for consumers, the top suggestions include raising prices and reducing services. They aren’t wasting their time either. The USPS more recently announced that they will be closing 5 Oregon area Post Office locations.

As a taxpayer, I’m glad to see that action is being taken. But I can’t help but wonder if the problem could be solved without reducing services and raising prices? Could technology play a role in bettering services while responsibly covering the federal agencies own expenses? How might the new business models from a web 2.0 age come into play?

While the USPS continued in it’s downward spiral, Ron Wiener founded Earth Class Mail in Portland, Oregon during 2004 (though he later moved the company to Seattle). The idea behind Earth Class Mail is to digitize mail and reduce the amount of physical mail delivered to your doorstep. After an initial focus on individual consumers, Earth Class Mail focused their business on large scale postal services….like the USPS. Their first major postal client is SwissPost, a non-governmental company with a major foothold on the European market.

The Earth Class Mail process is to divert all standard mail items to a sorting facility where the outside of every envelope is scanned and filed in each users online account for review. Users log into a secure portal where they can view the images of scanned envelopes and decide how to handle each. They may choose to have it delivered to their physical address, they can ask to have the envelope opened and it’s contents scanned, have it shredded or go straight to recycling.

So how can the USPS fix itself and become relevant again? In my opinion: technology and a freemium business model.

Earth Class Mail is an obvious solution for the problems facing the USPS. The United States Postal Service should immediately deploy technology from Earth Class Mail. Doing so could cut down physical mail delivery to a final destination by 50% or more. The indirect impact of consumers having the ability to shred and/or recycle their mail without ever having it delivered to their home/office could be an overall reduction in junk mail. Why spend the money to send junk mail if you know that most consumers will never see it?

As a consumer, imagine the convenience of the Earth Class Mail technology. Review all of your mail online first. You decide what gets delivered to your physical mail box, not the (junk) mailer. Identity protection at the click of the mouse by sending any sensitive document to the shredder. You know you don’t shred as much as you should at home. Not to mention the satisfaction of knowing that you are recycling more than double the amount of mail you currently do (based on data from Earth Class Mail and the USPS).

My next solution is inspired by a buzzword in internet business right now: the freemium. A freemium means that some basic products/services are free while additional, premium products/services can be purchased. How does this apply to the USPS and your mail delivery? I propose that the USPS end free delivery to consumer homes. I know, I know…you hate the idea. Work with me here. First, realize that most of your currently delivered mail is junk. Then remember that my solution would provide digital mail delivery, through technology by Earth Class Mail.

The USPS could end free home delivery in favor of giving every household a free, small PO box. Home delivery would be a premium option you could upgrade to if you were not satisfied with your free box. Like the PO box but wish it was bigger? No problem, you can ‘buy’ a larger one for a fee.

The obvious question now is where would you put all of these free PO boxes? That’s easy. Use the cost savings from the technology recently employed and the eliminated free home delivery to build facilities to house PO Boxes. it’s a lot easier to delivery to a handful of PO box centers than it is to 30,000 homes. Yes, it would be a large initial investment to build these facilities but after they are completed, it’s just upkeep. A lot cheaper than generous salary’s for drivers, truck maintenance and gas purchases. In fact, I bet just a small fraction of the current stimulus budget would pay for more than enough mail box buildings.

My two solutions together equal a net increase in service to customers, a reduction in operating costs and new revenue sources. They are dramatic suggestions but dramatic changes are needed to pull the USPS out of the hole it is in. So what do you think, Portland? Would you be happy with digital mail delivery and a free PO box instead of home delivery? What are your suggestions for fixing the United States Postal Service?