Prescott hybrid mail post exo 2012posting version


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Prescott hybrid mail post exo 2012posting version

  1. 1. 1  Let me start by saying that this is notabout hybrid mail technology. This is notabout the latest technologicaldevelopments, the latest vendors, the latestpostal adopters. This is about re-envisioning what postal systems do, orshould do, in the international mailbusiness. But we do need to define ourterms a little bit, and set up a hypotheticalto think about. Actually, you can have a form of hybrid mail experience byvisiting the Universal Postal Union booth downstairs where you can participate intesting the Global Monitoring System, GMS.Now, the phrase "hybrid mail" is not a technical and agreed term. For our purposeslet us call hybrid mail that portion of the postal transmission process which iselectronic and which begins as an electronic input from a sender which he intendswill be a physical output in the hands of the receiver. In addition, one couldprovide the sender and recipient a choice of the form of the delivered message –physical or electronic, and this requires more complexity in the system.So, let’s suppose that Im a big insurance company which every quarter prepares anaccount statement for each customer which I must transmit to each customer. Ineed to minimize the cost and maximize the accuracy of that transmission and thearrival of the document in a physical form at my customers address. Ideally Iwould like to give my customer a choice as to whether he receives paper or anelectronic message. But, despite my efforts to convert them, for the most part theyinsist on paper.I am not talking about what is basically digital content management on alocal/domestic basis which is sold as a cost-saving service. That’s mail generationand dispatch outsourcing, an alternative to having staff printing a letter, addressingan envelope, inserting, maybe franking, and walking it to the mailroom whichwalks it to the Post, or the Post comes for it. In this simpler scenario, you composeit, email it to a vendor, and he prints it off, puts it in an envelope and walks it to thehttp://hybrid‐ 
  2. 2. 2  Post. Ideally, this post office is very close to the destination address, to optimizethe delivery rate and minimize the delivery, ie. the post’s expenses.And that’s fine. It results in efficiencies. I use Click2Mail in the US, myself,and since I’m a one-man office and my post office is a 3-mile drive away, it’s aboon to me. But, it has more to do with the mail generation process than with themail process.Here’s a mail process:My insurance company has 250,000 letters/statements to send to clients in15 different countries. All on a file, or multiple files. Here are the headaches:getting it printed with “correct” addresses, sorted (maybe), bundled, tendered to thepost, shipped abroad to different countries, customs cleared, re-entered, re-sorted,and delivered, maybe.Now the Post says, “We can do that, but you know we lose sight of it whenwe put it on the airplane. This will take maybe 3 to 5 days for delivery in theindustrialized countries, maybe 10 days in the rest of the world, and some numberof those letters will not be deliverable because the address is wrong, addresseesmove, die, etc. What do you want done with those?”“Well, bring them back to us and I’ll have someone change the database.When do I get undeliverables? ” In this country, 2 weeks, in other countries, 3months if you’re lucky. Never, if you’re not lucky. ”And here are two examples of thenon-hybrid mail process, by the way, oneof which, the lower one, is by a companyreferring to itself as a hybrid vendor, andmaybe it is if it was printed near the inputpoint in California. But the sad thinghere is both envelopes are returnedundeliverable, long, long after they weremailed. Whatever happened to thepromise of the intelligent mail barcode?
  3. 3. 3  So, this is pretty much how mailhas been handled internationally sinceeven before the UPU was formed in the19th century. The only differencebetween the 19thcentury and now is useof the airplane. But the problem now isthat the posts have competition and needto rethink their business.Let’s look at what is happening. It’s notentirely digital substitution – that’s the wrong focus, and a view that causespotential dead-end policy choices. What’s happening is that the postal business isundergoing something that is not unprecedented – consumer acquisition of thepower of choice. It’s just happening so late because the technological challenge isnew.There is an excellent book, Satisfaction Guaranteed, by the social historian SusanStrasser, which describes the growth of marketing as a discipline in the UnitedStates in the late 19thand early 20thcenturies. I commend it to you. She documentsthe invention of marketing tactics by companies – packaging, factory tours,premiums, product positioning, street signs, sampling. And, she documents apowerful growth in consumer power. Before the industrial era and electricity,industrial food production, and packaging, the consumer had few or no choices.You could have anything, as longas the store owner stocked it. And hedecided what that would be.Ms. Strasser argues that the brand wasinvented by product producers first as acompetitive necessity, to distinguish onecan of corn from another, for example.So, not unexpectedly, the brand became apowerful market lever for… thehousewife. She could tell the oldest child to go to the corner store and buy TraderJoe’s branded canned corn, “And don’t let old Smith give you that other junk.”The housewife now had the power of choice to literally bypass the monopoly on
  4. 4. 4  final distribution of this guy - the shopkeeper. He still owned the shelf, but he hadlost the power of choice as to what to put on it. All because of something called a“brand”.Now, the digital “revolution” is like the development of brands. It empowers theconsumers, which includes businesses, who now have “brand” choices. And ofcourse that new brand on the block is digital communication through the Internet.And what was the response of the shopkeeper? Well, he combined with othershopkeepers to form chains of stores to acquire purchasing power vis-à-vis themanufacturers and market presence, but not necessarily power vis-à-vis theconsumer. He had to give the consumer what she wanted-choice.A similar power shift has taken place with the creation of digital communications.The communications choice given consumers and businesses is no less importantthan the power shift created on the development of brands when applied toconsumer goods. The brand struggle for access to the merchant’s shelf requiredthey give the consumer the ability to demand a product. The merchant no longerdecided what would be on his shelves; the consumer did. As a consequence, storeshad to multiply available products and choices, necessarily becoming morecomplex and varied in their offerings. “You have plenty of choices. Mine ornone.” was no longer acceptable in the retail world.Many posts haven’t fully absorbed that lesson. The USPS has done so butunfortunately the Congress has not. It has been traumatic for the postal systems tolearn. The lesson is that you have to listen to customers and give them what theywant, because if you do not your competitor will.And the competitors are giving the posts real competition, as we all know. Butcompetition doing what? Remember what the shop-keepers did? They turned toselling space and marketing capability. The posts who have figured this outcontinue, of course, to carry letters, but they carry digital letters, also. They noware no longer only carrying letters…..they focus on carrying messages andmanaging messaging technology.And this is a second lesson to us from this old shopkeeper. The shopkeepers whosurvived finally figured out that they were not selling cans of corn, they were
  5. 5. 5  actually selling advertising, display and temporary storage space where themanufacturers would give the consumer choices.As regards the posts, consumers and businesses don’t want the post to carry letters,they want them to carry messages – which need not be on paper for their entirelives. The posts have to carry messages, in whatever form, and manage messagingtechnology, although they needn’t manage all of it. That’s the digital change here.Vince Cerf, one of the developers of the Internet, famously said, “If it can bedigital, it will be digital.” There is need for paper communication only if requiredby law or the law of the consumer’s desire. My wife and I both insist on monthlypaper bills from the telephone and utility companies and banks.And so the need for the Post to accommodate people who communicate inwriting, to send messages that involve a written record, will not go away. But if theposts want to carry a substantial percentage of the messages people are indifferentabout being physical or digital, they must develop the capability to do so.So, what is the prognosis of future volumes? What’s the status ofdevelopment of hybrid mail services?Internationally there is both dangerand promise, as the data shows. Thisprojection of volumes among InternationalPost Corporation members shows that twoexpert panels suggest there is still a healthybusiness to be done delivering lettersacross borders, although smaller. I thinkthese are probably over-pessimisticbecause the panels did not account forincreases in the number of households,which is certain to occur, and increasing wealth, which historically has meant moremail. IPC says the physical mail volume globally is still 337 billion pieces peryear.This graph from the Adrenale work for the UPU shows that internationalmail volumes have fallen, but there is a base, and note down here that during that
  6. 6. 6  period direct mail volumes across bordersincreased by 17%. Hybrid mail is an idealmessaging medium for hybrid mail,combining as it does the physical mailpiece and the ability to execute campaignsin a manner highly targeted as to place andtime.This graph is a more granular viewof the same data, and it shows thedeterioration in everything except directmail since 1998 – and again that alone isan important distinction. I take comfort init because much of this cross-bordervolume may well be e-commerce related –new invoices, new offers, promotions,catalogues. And, I believe that the growthin e-commerce parcel delivery will beaccompanied by increasing mail volumes – new offers to these customers,invoices, and catalogues.Commercial direct mail volumes in the US, UK and other countries havecontinued to be healthy and in some cases continue to increase year-on-year.Why? Because it works.Over the last year or so, Googlehas done massive mailings of thisconstructed piece in the US/Canada,UK, Brazil and perhaps elsewhere. Ibelieve that in one month Google wasthe USPS’s largest mailer.
  7. 7. 7  Finally, from the looks of thisAdrenale slide of cross-border volumesof designated operators and otheroperators, we see the posts may wellhave been losing more to the competitionthan to technology, but we do know thatboth have suffered over the last 4 years.And note the difference in letter mail, aslight deterioration, and the importantgrowth in the lower left in the expressand parcel volumes. Much of that is probably e-commerce growing dramatically,but, some portion of this traffic, the express mail traffic, would no doubt fit nicelyinto a hybrid mail product.We and the posts need to rethinkwhat is the purpose here – deliverpaper, or deliver messages. There isgoing to be plenty of paper aroundavailable to become digital! In 2010there were 4.8 billion items! Take thisas a point of departure and let’s look ata typical international mail example.In the 21stcentury theconversation with the client we started with should continue along these lines:“But wait,” says the modern post.“We’ve got a better service for youbecause we studied what you want andapplied contemporary technology andcustomer-oriented internationalrelationship thinking to your shipment.”Which is to say that a new era hasstarted. The digital era. The “dot.Post”
  8. 8. 8  era of digital communication and secure electronic international postal business.The post now says, “Don’t print. Give us the files, data, addresses, names.We’ll send it to Post B who will have it printed. Or, or you can use a licensedvendor here to manage the files; they can also manage entry here if you wish. Theelectronic transmission goes through our secure international system managed bythe UPU, called dot Post, to Post B or your vendor over there, as you wish. Beforeprinting, the Post or your vendor will apply the up-to-date change of address/gone-away/deceased files to your data, correct the addresses, print, forward, or tell youit’s a problem and deliver the rest. You can expect delivery in 24 hours if you get itto us by 9AM . And, by the way, it’s cheaper than letters, and it is moreenvironmentally friendly. Each of the printed letters sent from here would create20grams of carbon.”Now, that’s the future. All we have to talk about is what is getting in the wayof it coming to be. Where are we in development?Hybrid mail has had significant development in a number of countries. But,interestingly, not where the mail volumes are the greatest, and not much in theinternational realm, which in any case would be expected. Historically in the 90smany posts experimented with hybrid mail and a few, such as Sweden, Denmark,Italy, Portugal, Germany, and France have continued to provide services.Something like 60% of all invoices inPortugal are hybrid mail.The UPUs recent excellent bookshowing the results of their survey of theelectronic services offered by the postsaround the world gives us a picture, ifonly a partial picture, of thedevelopmental situation with hybridmail.
  9. 9. 9  This table summarizes the responsesthe UPU received to its questionnaire tomember posts on what electronic servicesthey offered. It’s an excellent work,although of course dependent on itsmembers’ responding, which they do notalways do. It shows there is room forgrowth.Interestingly hybrid mail is pretty well-developed in certain developingcountries, such as in Africa, where it is used internally, often because roadtransport is difficult. However, you will note that of the 93 countries respondingonly 34 provide hybrid mail with physical delivery, and 20 provide electronicdelivery, or “reverse hybrid mail” and most of those 20 duplicate the list of the 34.Do the customers insist on receiving paper, or is the technology not quiteaffordable yet to justify reverse hybrid mail? Or, is it the posts’ mailers who insistthey want paper delivered? The Russian Post has a newspaper print product,Cyberpress, for newspaper subscribers without Internet access. The vauntedelectronic mailbox, on which companies such as Zumbox pegged their fate, hasseen a relatively slow pickup, even in tech-savvy Switzerland.So, the hybrid mail service of accepting physical messages and renderingthem into electronic form is the least widely developed. Of course it is also themost expensive service to provide.With respect to “internationalhybrid mail”, the UPU indicates thatonly 7% of developing countries, or 6of 78, and 25% or 4 of 16 industrializedcountries have international service.And here is the list of those countries which I was able to collect from theUPU data, together with recent volumes. In many respects quite surprising. The
  10. 10. 10  data collected was for 2011, and if nonewas reported yet, I have inserted “ND”for “no data” and put in the 2010volumes. Clearly, Italy is a major playerwith a long tradition of hybrid mail, butthe volume amount is really quite small,and the size of the volume reported byCyprus is quite noteworthy, as is that ofthe US Postal Service, which I did notknow provided hybrid mail service.So, to date, the digitalization ofinternational letter communication, hasnot been met by the UPU system withthe attention it merits. No one knowsfor sure how much there is, becausethose numbers were only what passedfrom post to post. but you can be surethere most certainly will be more,otherwise we wouldn’t have all thesecompanies offering the service or theequipment central to providing it. A work group at the UPU struggled with thissubject for 4 years from 2004 to 2008 when some progress was made and workstopped due to personnel changes. Much of the problem was discussion ofterminal dues and avoiding diversion of letter-based terminal dues to hybrid mailterminal dues. However, the terminal dues system rests on the assumption that allmail is still created and delivered in paper form by 19th Century bulk methods andwith 20thcentury logistical costs, and assuming physical delivery work from a portof entry that is as far across the country as possible from the delivery address. Thedanger isn’t diversion to the new messaging medium, it is complete loss of mailvolume to hybrid mail which will remain completely outside the UPU system asdirect entry.With the launch of dot Post, there is a secure, global environment fordeployment of tomorrow’s letter mail - faster, more secure, cheaper to manage,
  11. 11. 11  flexible, and environmentally friendly.Dot Post and hybrid mail are perfecttogether.The UPU settlement system has notadapted to the electronic delivery ofcorrespondence and other mail which canbe digitized or printed on paper anywherein the world, across any border, with thepush of a button. New compensation models, that is terminal dues, must be createdto account for these new messaging forms. And we need new standards,regulations, and compensation models.I think existing domestic hybrid mail volumes definitely show that users want touse hybrid mail in the international environment, and to use the UPU system forelectronic messaging, which they currently can not do. The faster dispatch andreply possibilities, and possible additional address correction and return servicescreate a very attractive proposition for mailers. But, these messages are now andwill continue to multiply outside the system unless the UPU acts soon. Customerswant this capability, they want to buy the corn from the supermarket that is thePost, but they’ll go elsewhere if the Post doesn’t carry the product.It is to carry forward the work ofbringing the hybrid mail choice into theUPU system that the InternationalHybrid Mail Coalition was formed.We’d welcome new allies and you canlearn more about our work at booth1125, the DDM booth, or by contactingeither myself or Enrico at the contactpoints indicated here.© Charles Prescott, 2012 www.hybrid-mail.orghttp://hybrid‐