Failure forecast for e-USPS

Faced with losing some of its most lucrative business to the Internet, the U.S. Postal Service has been experimenting with e-commerce as a source of new revenue. But the strategy is unlikely to work, the General Accounting Office says.

That grim forecast comes as the Postal Service tries to head off a looming deficit of $2 billion to $3 billion this year.

With e-mail and online transactions eroding the volume of first-class mail — expected to drop about 3.6 percent each year from 2004 through 2008 — the Postal Service has launched a number of Internet-based ventures to recover lost revenue (see box).

The new services may be innovative, but GAO noted that they are not money-makers.

The Postal Service "has not achieved its revenue targets from its new initiatives for the first half of this fiscal year," stated an April 4 GAO report to the House Government Reform Committee. And recently, the Postal Service lowered projected revenues from its new initiatives for the second half of fiscal 2001.

A Postal Service spokeswoman said it's too early to predict failure. "It's only this week that our first [service] is a year old," said spokeswoman Sue Brennan. "We never anticipated making money within the first two years."

The Postal Service's e-commerce ventures began amid the collapse of many commercial e-commerce initiatives. "Consumer adoption rates for e-services have been lower than projected for everyone," not just for the Postal Service, Brennan said.

GAO notes that even the service's five-year plan predicts "no significant new revenue...from new products and services during the next five years."

The Internet is only a small factor in the Postal Service's fiscal woes, GAO said. Fast-rising retirement costs, medical insurance expenses, fuel prices and labor costs are major financial problems. npoint, click and mail

The Postal Service, in a bid to regain customers, is expanding its e-commerce options.

* Postal Store — Sells standard postage and collector stamps, phone cards and stationery, www.usps.com.

* e-BillPay — Online billing and bill paying service, www.usps.com/ebpp.

* NetPost Mailing Online — Sends certified mail, postcards, cards and letters, www.usps.com/netpost.

* Small Business Tools — Offers commercial mailing strategies, www.usps. com/smallbiz.

* PosteCS — Sends an electronic, secure courier service, www.usps.com/ postecs.