With the Internet, the Postal Service has been experiencing what it calls "electronic diversion" with people moving online for correspondence. A research company says 70 per cent of households that have computers pay bills online each month.

Amid unrelenting bad news, the Postal Service is striving to make the case that mail is here to stay.

“We’re very optimistic about the future of mail because mail has great value,” said Susan Plonkey, vice president for sales. “Mail works.”

Top postal officials say the recession is to blame for the agency’s $7 billion deficit and a steep drop in the volume of mail, and they express confidence that mail, particularly advertising, will rebound.

But even the Postal Service acknowledges that some mail is gone for good. Earlier this week, the Postal Service said that it would offer cash incentives to get as many as 30,000 employees to voluntarily resign or take early retirement by the end of September and save $500 million next year.

Electronic diversion

With the Internet, the Postal Service has been experiencing what it calls “electronic diversion” with people moving online for correspondence and other activities.Javelin Strategy and Research, a research and consulting company for the financial services industry, says that 70 per cent of households that have computers pay bills online each month, up from 64 percent last year.

Mark Schwanhausser, an analyst for Javelin, said that people move to online bill paying for convenience, and because they are “fee sensitive” during a tough economic climate. “I don’t think this is going to be something that’s going to backtrack,” he said.

Another culprit: the electronic filing of tax returns. The Postal Service says there was a sharp increase in e-filing this year, with fewer people mailing in their forms. Many people will also receive electronic tax refunds, which were previously mailed as checks.

“It’s only growing,” said Kate Fulton, senior vice president for government relations at H&R Block, which helps customers file online. “The IRS is driving this. They want more e-filing, and we are embracing it too.”

The Postal Service is resigned to losing some business to online alternatives. But postal officials also say that, with the Internet in full swing, the volume of mail hit a record in 2006. That year, the Postal Service handled 213 billion pieces of mail because, even as it lost some business to the Internet, advertising mail was booming.

The Postal Service says that a decline in marketing mail, like credit card offers and bulk advertisements, is responsible for most of the drop in the amount of mail sent this fiscal year. About 175 billion pieces of mail will be sent in 2009, down from 202 billion last year.

“I believe that when the economy returns, marketing mail will grow,” Plonkey, the service’s vice president, said. “I think that we’ll continue to have electronic diversion, but I think that we can offset that loss.”

Advertising analysts agree with that assessment to some degree. Brian Wieser, head forecaster at the media agency Magna, says that advertising mail will grow but not get back to where it was before the recession within the next five years. — © 2009 The New York Times News Service

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