The "mail," meaning the US postal mail, has changed forever. Just the fact that 25 years ago, in 1987, the "mail" would, and could, mean only one thing to most consumers, tells most of the story. Today, email has eclipsed postal mail and many people have migrated to a more digital life. But, is email responsible for the decline in postal mail? Or are there other factors that have played a role in changing the definition of "mail"? This raises the obvious questions: How, why, and when did the postal mail decline happen?
Perhaps the easiest question to answer is how this happened. One invention changed the game, more than any other factor: email. The advent of email caused physical, person-to-person mail to essentially disappear overnight. Email was extremely attractive to consumers, offering ease-of-use, instantaneous delivery, simple retrieval, and management of their personal mail. This didn't lead to a shortage of mail for the USPS to deliver, but the statistics hide the story. Email led to a disappearance of the singular component -- person-to-person mail -- that made postal mail a desired experience for consumers. When we were kids, we used to wait eagerly for the mail to arrive. Now, many of us loathe the visit to the mailbox because nothing enjoyable is waiting for us there. Just looking at searches for "post office"â on Twitter shows that out of 100 random tweets, 16% are negative comments and only two are positive comments. Comments on long lines and rude service are simply too common.
The History of Decline
When did it happen? Email started making serious inroads near the turn of the 21st century. In the 1990's, the USPS was a $55B business, the size of many Fortune 10 companies. Mail volumes still pushed forward -- even though the demise of the post office was already widely starting to enter public debate. The reality is that a shift in business model overcame a natural pivot toward a decline in mail. The postal mail category actually grew because while email took the person-to-person mailpiece, business mail remained and the direct mail business soared.
But, it's impossible to save a business long term with a solution that only works well for one constituency. Consumers seeing more and more standard or junk mail have less and less incentive to want to see the mail waiting for them. In 2005, first class mail fell below junk mail in volume for the first time. Coincidentally (or not), 2006 was the last year that the USPS turned a profit.
The USPS sees the issue as "a decline in mail volume."â This is not the problem -- it's the effect of the issue, which is that there are faster, cheaper communication alternatives. In short, over the last 25 years, the USPS and most of global posts looked at their business the wrong way. They saw themselves as being in the mail delivery business and not in the communications business.
What's Next?
We haven't said that postal mail is going to zero, and for good reason. In a recent survey, only four percent of users were ready to eliminate postal mail in favor of email. People crave several things from a new service to make it truly a replacement. If it is faster, less expensive, and safer than a competing service, it may replace that service entirely. Physical mail still has many advantages over email and other paperless methods employed by many large billers/businesses.
1. Postal mail is an aggregation point
2. Postal mail is push mail
3. Postal mail is considered safe
Consumers are looking for an aggregated solution. Until adoption of a better, aggregated model occurs, physical postal smail will keep pouring into households. Hence, McKinsey is estimating 150 billion pieces of mail delivered in 2020, down from the peak of 213 billion pieces in 2007. But, note: 150 billion is still very significant.
With the obvious cost incentive, you would have thought businesses would have moved their paper statements and bills over to electronic communications in the past 10 years. Undelivered postal mail alone costs American businesses over 1.8 billion dollars a year.
This was the promise of paperless that never happened. Turns out that a 15-18% adoption rate from consumers going paperless is the natural plateau, as most users don't like the multiple passwords/ecosystems they have to go through to get paperless communications. Consumers are also unsure of retention policies and are not willing to give up the control that paper instills. They simply state, "I want my paper." Not true. What they want is "owned proof."â They want control/ownership of document, whether in digital or non-digital form.
Email also quickly got the reputation for being unsafe, as three out of four messages sent were deemed as spam. Email was open for abuse and fraught with security issues. It did not represent a viable solution for businesses to safely and effectively communicate with consumers. Without a secure, reliable solution, businesses continued to send physical mail, enduring the growing, significant costs and inefficiencies.
As a result, consumers continued to endure the pain and inconvenience of managing their physical mail, manually sorting, filing and storing what was important to them and throwing out the rest.
What will 2037 look like?
Postal mail will keep migrating to a faster, safer, more convenient solution. Consumers want anywhere-anytime-access for everything in their lives: music, TV, movies, photos, contacts, files, and records. They will expect the same thing from mail.
This industry will take three important hurdle-jumps in the next 25 years: structural, emotional, and political.
Companies will have to prove that they are ready for the change: Businesses like AT&T and Time, Inc will have to grow weary of spending over $1B on paper and postage each year; consumers have to be willing to accept a change that will lean on their "nostalgia"â for the post office; and the US government will have to embrace the digital path.
To overcome these barriers, we need a system that honors physical postal mail while taking advantage of the digital experience. Companies and consumers alike will have to be shown that digital letter mail can give a better experience. But, not just as a delivery/storage solution. Intelligent product features will read the mail and provide alerts on the information, even take actions pre-defined by the users.
On the political side, the US Government will have to support digital solutions on every front. The Social Security Administration is moving to paperless payments in 2013. This will be pivotal, as the age group least likely to migrate to a "tech"â solution will be forced to do so. That should open the door for adoption of a "digital postal system" as well. If unemployment payments, and other services move to digital communications and payments, then the shift will happen. In 2012, over 70% of households are paying their taxes via e-File according to the IRS. If every government agency moves to a digital communications system, that will lead to the shift in postal mail as well.
Earlier this year, Postmaster General Patrick Donahue told USA Today that the USPS would probably have to limit mail delivery to just three days a week within the next 15 years.
With statements like these, we should expect physical postal letter mail to have nearly entirely given way to an aggregated digital postal mailbox system by 2037.
Download the PDF to see the charts that accompany this article!
Perhaps the easiest question to answer is how this happened. One invention changed the game, more than any other factor: email. The advent of email caused physical, person-to-person mail to essentially disappear overnight. Email was extremely attractive to consumers, offering ease-of-use, instantaneous delivery, simple retrieval, and management of their personal mail. This didn't lead to a shortage of mail for the USPS to deliver, but the statistics hide the story. Email led to a disappearance of the singular component -- person-to-person mail -- that made postal mail a desired experience for consumers. When we were kids, we used to wait eagerly for the mail to arrive. Now, many of us loathe the visit to the mailbox because nothing enjoyable is waiting for us there. Just looking at searches for "post office"â on Twitter shows that out of 100 random tweets, 16% are negative comments and only two are positive comments. Comments on long lines and rude service are simply too common.
The History of Decline
When did it happen? Email started making serious inroads near the turn of the 21st century. In the 1990's, the USPS was a $55B business, the size of many Fortune 10 companies. Mail volumes still pushed forward -- even though the demise of the post office was already widely starting to enter public debate. The reality is that a shift in business model overcame a natural pivot toward a decline in mail. The postal mail category actually grew because while email took the person-to-person mailpiece, business mail remained and the direct mail business soared.
But, it's impossible to save a business long term with a solution that only works well for one constituency. Consumers seeing more and more standard or junk mail have less and less incentive to want to see the mail waiting for them. In 2005, first class mail fell below junk mail in volume for the first time. Coincidentally (or not), 2006 was the last year that the USPS turned a profit.
The USPS sees the issue as "a decline in mail volume."â This is not the problem -- it's the effect of the issue, which is that there are faster, cheaper communication alternatives. In short, over the last 25 years, the USPS and most of global posts looked at their business the wrong way. They saw themselves as being in the mail delivery business and not in the communications business.
What's Next?
We haven't said that postal mail is going to zero, and for good reason. In a recent survey, only four percent of users were ready to eliminate postal mail in favor of email. People crave several things from a new service to make it truly a replacement. If it is faster, less expensive, and safer than a competing service, it may replace that service entirely. Physical mail still has many advantages over email and other paperless methods employed by many large billers/businesses.
1. Postal mail is an aggregation point
2. Postal mail is push mail
3. Postal mail is considered safe
Consumers are looking for an aggregated solution. Until adoption of a better, aggregated model occurs, physical postal smail will keep pouring into households. Hence, McKinsey is estimating 150 billion pieces of mail delivered in 2020, down from the peak of 213 billion pieces in 2007. But, note: 150 billion is still very significant.
With the obvious cost incentive, you would have thought businesses would have moved their paper statements and bills over to electronic communications in the past 10 years. Undelivered postal mail alone costs American businesses over 1.8 billion dollars a year.
This was the promise of paperless that never happened. Turns out that a 15-18% adoption rate from consumers going paperless is the natural plateau, as most users don't like the multiple passwords/ecosystems they have to go through to get paperless communications. Consumers are also unsure of retention policies and are not willing to give up the control that paper instills. They simply state, "I want my paper." Not true. What they want is "owned proof."â They want control/ownership of document, whether in digital or non-digital form.
Email also quickly got the reputation for being unsafe, as three out of four messages sent were deemed as spam. Email was open for abuse and fraught with security issues. It did not represent a viable solution for businesses to safely and effectively communicate with consumers. Without a secure, reliable solution, businesses continued to send physical mail, enduring the growing, significant costs and inefficiencies.
As a result, consumers continued to endure the pain and inconvenience of managing their physical mail, manually sorting, filing and storing what was important to them and throwing out the rest.
What will 2037 look like?
Postal mail will keep migrating to a faster, safer, more convenient solution. Consumers want anywhere-anytime-access for everything in their lives: music, TV, movies, photos, contacts, files, and records. They will expect the same thing from mail.
This industry will take three important hurdle-jumps in the next 25 years: structural, emotional, and political.
Companies will have to prove that they are ready for the change: Businesses like AT&T and Time, Inc will have to grow weary of spending over $1B on paper and postage each year; consumers have to be willing to accept a change that will lean on their "nostalgia"â for the post office; and the US government will have to embrace the digital path.
To overcome these barriers, we need a system that honors physical postal mail while taking advantage of the digital experience. Companies and consumers alike will have to be shown that digital letter mail can give a better experience. But, not just as a delivery/storage solution. Intelligent product features will read the mail and provide alerts on the information, even take actions pre-defined by the users.
On the political side, the US Government will have to support digital solutions on every front. The Social Security Administration is moving to paperless payments in 2013. This will be pivotal, as the age group least likely to migrate to a "tech"â solution will be forced to do so. That should open the door for adoption of a "digital postal system" as well. If unemployment payments, and other services move to digital communications and payments, then the shift will happen. In 2012, over 70% of households are paying their taxes via e-File according to the IRS. If every government agency moves to a digital communications system, that will lead to the shift in postal mail as well.
Earlier this year, Postmaster General Patrick Donahue told USA Today that the USPS would probably have to limit mail delivery to just three days a week within the next 15 years.
With statements like these, we should expect physical postal letter mail to have nearly entirely given way to an aggregated digital postal mailbox system by 2037.
Download the PDF to see the charts that accompany this article!
