E-business shortchanges USPS

"U.S. Postal Service: Postal Activities and Laws Related to Electronic Commerce"

The problem is, the check isn't in the mail.

Businesses and the federal government are relying increasingly on electronic

transactions, and it's devastating the U.S. Postal Service.

This year the mail carrier expects to lose $300 million. More than half

of that — about $180 million in lost revenue — is due to a half-billion

checks the federal government has decided to deliver electronically rather

than through the mail.

The government isn't the only postal customer cutting back. Banks reduced

their mail volume by 18 percent between 1996 and 1999, according to the

American Bankers Association, and businesses from utilities to phone companies

are encouraging their customers to pay their bills online.

It's probably going to get worse. The Postal Service is predicting "substantial

declines" in the volume of first-class mail over the next decade. According

to the General Accounting Office, the anticipated revenue losses could make

it difficult for the mail service to perform its primary function of providing

the nation with universal postal service at reasonable rates.

But the switch to electronic transfers has its positives as well as

its negatives.

"Online sales are expected to grow substantially over the next few years,

which would entail a dramatic rise in parcel shipments and returns," GAO

auditors reported. Unfortunately for the Postal Service, parcel post is

a sector of the business with a lot of competition.

Not only would the Postal Service face its traditional rivals, FedEx

and UPS, but it is also likely to face new companies offering such services

as same-day delivery. That's already happening with some online purchases,

such as groceries, CDs, videos and books, the GAO reports.

However, there other ways the Postal Service could profit from the online

revolution. USPS already is offering a number of electronic services, including

electronic bill paying. And it is considering others, including guaranteed

delivery of electronic documents; the sale of phone cards and other merchandise

over the Internet; and a money-by-wire service to Mexico.

"The Internet offers unparalleled opportunities" for the Postal Service

to expand its revenue base, the GAO said. But there remain unanswered questions

about which areas the Postal Service can enter.