New U.S. Postal Service-approved desktop shipping tools and third-party discount insurance are fundamentally reshaping the competitive position for Postal Service shipping services. The package shipping market boasts annual revenues in excess of $31 billion and attractive growth rates. Growing USPS sales in package shipping is a key to the USPS� Transformation Plan, and the new tools described in this article give the USPS� sales force the competitive services they need to rise to that challenge.
Attractive Market
According to the USPS� Transformation Plan, parcel volume is projected to grow at an annual rate of seven percent in key industries. This healthy growth rate is due in part to the success of online retailers who will ship an estimated 2.3 billion residential parcels with an estimated 360 million returns in 2003. Some segments are growing even more rapidly such as the online auction market, which is growing at a 50% annual rate. These market segments, therefore, represent an extremely attractive growth opportunity.
At the same time, the USPS is faced with financial challenges resulting from a stagnant economy and a decline in First Class mail volume. The GAO estimates that the average annual rate of decrease in First Class mail volume will be 3.6% from FY 2004 through 2008. Although the Postal Service has taken steps to contain costs, revenue growth and increased contribution in growing mail classes are essential to help offset the First Class mail volume drop. The growth in the parcel shipping market segments offers the USPS� sales force an opportunity to fulfill this need.
Solution Void
In the past, USPS shipping customers had two options: expensive, cumbersome manifesting solutions for high-volume shippers or crowded retail lobby lines for small shippers. Although these options were successful on the extreme ends of the marketplace, they failed to support the USPS� sales force in the mainstream growth segments. For instance, while the occasional shipper is willing to visit the post office to mail packages, a professional online seller will not � especially when competitors offer desktop shipping solutions.
In order for the USPS� sales force to capitalize on the market opportunity, it must be able to offer shippers simple, cost-effective desktop shipping tools. These tools must allow users to start shipping packages immediately so that the sale can be closed while the interest is high; they must print pre-paid shipping labels so that package pickup can be easily arranged; and they must integrate all services, including electronic Delivery and Signature Confirmation and parcel insurance, so users can ship all of their packages without ever having to go to the post office. This is where the new breed of desktop shipping systems offers the USPS� sales force the killer application to grow revenue.
Desktop Shipping
The new breed of desktop shipping systems, such as Endicia Internet Postage (www.endicia.com), integrates the USPS� Web tools shipping API to provide electronic Delivery and Signature Confirmation, electronic Express Mail labels and the International Mail advisor. They use PC Postage to pre-pay shipping labels and integrated insurance to complete the solution. Endicia uses award-winning software to design and print prepaid postage shipping labels for all USPS shipping classes. The shipping labels are all printed with verified and standardized destination addresses, and users can customize their shipping labels with logos, graphics and text. Users can also print shipping labels with the postage amounts hidden (aka Postage-Paid or �Stealth� Indicia).
Desktop shipping solutions should not be confused with simple PC Postage applications. Desktop shipping solutions offer complete electronic shipment management with advanced features for professional shippers. For example, consider some of Endicia�s features:
1. The Postage Log maintains all postage purchases and shipments including all package information such as recipient, destination address, tracking number, mail class and optional services, printing and postmark dates, declared value, package description and cost-codes. Customers can search for, obtain the latest tracking or delivery information or print a receipt for their shipments. The log can be printed or exported to other applications for a user-defined period of time.
2. Postage-spending statements include options for detailed listings of all shipments, summaries of spending, mail class tables and charts and delivery statistics for the individual mail classes used by the shipper.
3. Shipment notification sends an e-mail to the package recipient announcing the shipment, the date of shipping, the destination address, the mail class and a Web link to the latest status of their shipments. The advantage of this feature is that USPS customers can proactively inform their own customers that orders have shipped and avoid the customer support cost of fielding calls about shipments.
4. The International Mail advisor displays mail classes, rates, prohibitions, restrictions, observations, required customs forms and areas served for the destination country and package weight. Because international rates and regulations change far more frequently than domestic, this information is retrieved in real-time from the USPS to use the most up-to-date data.
Parcel Insurance
Shippers will typically insure high-value products or offer their customers insurance for an extra charge. There are two USPS-approved options for insurance: USPS Insured Mail and U-PIC discount parcel insurance (www.u-pic.com). With the USPS option, users are required to fill out a 3813-P form and present insured packages in person at the post office. This is not feasible for most merchants and high-volume shippers. On the other hand, U-PIC offers a USPS-approved alternative, which not only avoids this requirement but also saves customers up to 80% on their insurance premiums. U-PIC insurance is fully integrated into Endicia Internet Postage so that users only have to enter a declared value for the shipments they wish to insure.
U-PIC is the only insurance company that is an approved partner of the USPS. U-PIC is underwritten by Indemnity, division of Ace, one of the world�s leading insurance providers. Shippers can take advantage of U-PIC to save money on their insurance premiums and avoid a trip to the post office. Customers who combine U-PIC insurance with Delivery or Signature Confirmation reduce their insurance rates by up to 80%. For example, a shipper who insures one package for a declared value of $100 each business day will save $340 for the year. U-PIC also receives high praise for its prompt claims payment. After the customary 30-day waiting period from the date of shipment, U-PIC guarantees all USPS claims are paid within seven to 10 working days. International insurance is available, and U-PIC insures any USPS shipping method. U-PIC provides shippers with a simple way to reduce their shipping expenses, and there are no start-up fees or monthly fees. Packages insured with U-PIC do not need to be presented to a retail clerk, so they can be deposited in a mailbox or handed to a mail carrier. U-PIC also provides online parcel insurance for buyers and sellers who wish to have the occasional package insured directly.
Because insurance is not a core product for the USPS, third-party insurance, such as U-PIC, enhances the shipping services the USPS provides and bolsters its competitive position. This is another key to growing USPS revenue.
Meeting the Challenges
The new breed of desktop shipping solutions allows the USPS sales force to implement the USPS transformation strategy for package services. By driving adoption of desktop shipping, the USPS controls costs because it keeps shippers out of expensive retail lobbies. By driving revenue growth in packages, the USPS manages price because it covers more of its fixed costs. Most importantly, by promoting desktop shipping, the USPS enhances service for the customer.
Steve Rifai is director of Marketing and USPS liaison at Envelope Manager Software, a leader in desktop mail software. For more information, visit www.endicia.com orwww.envmgr.com.
