USPS plans business model makeover

USPS plans business model makeover

'We now face the reality that the legislation of 32 years ago no longer allows us the ability to effectively change in today's technological marketplace.'
'POSTMASTER GENERAL JACK POTTER

The Postal Service lost $10.4 million last year running its online payment services, prompting the agency to revisit its e-commerce initiatives.

Overall, USPS had predicted $104 million in 2001 revenue from all its e-commerce activities but brought in less than $1 million, according to a recent General Accounting Office report. Only one effort turned a profit last year, so postal officials are deciding whether to ditch some projects.

'All e-initiatives have gone slower than we would have liked,' deputy postmaster general John Nolan said. 'We must make sure we are focusing our resources on those products and services that will provide convenience and value to our customers.'

NetPost posts profit

A report released last week by the Postal Rate Commission's Office of the Consumer Advocate found NetPost Certified Mail was the organization's lone online moneymaker, realizing a profit of $298,000 last year. NetPost Certified Mail lets users create a letter, pay online and send it certified using a bar code to track it.

The service's e-commerce shortfall is just a small part of a larger problem at USPS, postal officials said. Facing a projected $1.35 billion loss this year, the Postal Service this month released a transformation plan that officials said would let the agency reinvent itself and become more competitive.

Requested by the Senate Governmental Affairs Committee, the plan outlines a business model that would maintain the service's status as a government agency but let it act more like a business. USPS already operates as a quasi-agency, covering most costs through the revenue taken in on services.

Earnings, not debt

But postmaster general Jack Potter said the transformation model is markedly different from how USPS operates today.

'Instead of breaking even, our financial goal would be to generate reasonable returns,' he said. 'Earnings would finance capital projects instead of having to resort to increasing our debt load.'

USPS officials also considered fully privatizing the agency or surviving only on congressional appropriations. But neither of these approaches won out, Potter said.

The model would create a healthy economic environment for technology efforts, Nolan said. 'There is a lot of value we can add through the use of technology,' he said. 'We just have to make sure we have the money.'

Nolan said one initiative the service is considering is an effort to connect all post offices on a WAN and move operations information from the post offices into one database for analysis.

'We have been able to get managers the raw data, but if we can get them data that has been analyzed, it will help them do the right thing,' he said.

Potter said the plan would let the Postal Service develop new revenue streams, introduce flexible pricing and explore ways to improve collective bargaining.

USPS had hoped its e-commerce initiatives would create revenue streams, but they have not panned out so far.

But an industry association said it would like to see the Postal Service scrap all of its e-commerce initiatives.

'We don't believe e-commerce has its place within a government agency, especially if they are going to retain the advantages of a government agency where there is no fear of failure and plenty of sources of capital,' said Jason Mahler, vice president and general counsel for the Computer and Communications Industry Association in Washington. 'USPS must figure out a way to deliver the mail and fund it without any side activities.'

Nolan said the Postal Service would evaluate its e-commerce initiatives this year and decide which to keep and which to abandon.

Among the first the service will look at is NetPost Certified. NetPost Certified is an online version of NetPost Certified Mail for government users. It lets agencies send secure, authenticated electronic documents using the Postal Service's electronic postmark. The service provides a certificate authority to secure the documents.

'Agencies have been very slow to pick this up, other than the Social Security Administration,' Nolan said. 'It has been frustrating because it can speed up the movement of information and money.'

Nolan said a decision on NetPost Certified would be made by the end of June.

The next step in the transformation process is a congressional review because lawmakers would need to approve legislative changes governing the way the Postal Service operates.

'We now face the reality that the legislation of 32 years ago no longer allows us the ability to effectively change in today's technological marketplace,' Potter said.

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