Understanding Postal: USPS Transitions to Digital Agency in Hopes to Survive

The U.S. Postal Service is dipping its toes into the digital waters, recently announcing plans to embark on several digital initiatives, starting with the formation of a new Digital Solutions Group (DSG) within its organization.

USPS Vice President of Digital Solutions Paul Vogel told customers at a recent meeting that the federal agency is considering how best to transition from the existing hybrid environment of physical and digital into a more digital role in the future. The Postal Service defines "digital solutions" as "products or services that enhance physical USPS offerings with digital capabilities," such as the USPS' recent Every Door Direct Mail (EDDM) offering, or those initiatives that "present fully digital alternatives to physical products and services."

The USPS has been conducting market analyses and surveys concerning its potential role in the digital arena. To date, feedback received by the USPS confirms that there is a market demand for its solutions; it's not easy to make money in digital; the USPS initially should remain true to its core values and mission; the first few USPS digital initiatives must succeed in order to gain commercial mailers’ trust; the USPS should set up a separate group to "try fast and fail small"; the market changes quickly; and the USPS needs to engage with industry partners.

One of the challenges the Postal Service faces in establishing itself as a digital services provider is the fact that it's never been thought of in that light before. "The USPS isn't thought of as having digital bang," Vogel told customers, "so we need to start slow, not big, or else no one will believe us." He added that the USPS is looking to ease slowly into digital by enhancing its core products and its reputation along with those efforts. Stressing that the USPS isn't giving up on physical mail, which Vogel said still has "a long life cycle," he told customers that the agency is focusing on adding electronic enhancements to its existing core products and services.

Vogel also said that the feedback the USPS received, particularly that its first few digital initiatives must be successful, points to a need to change the agency's culture. Noting that 60 percent of digital activities fail — e.g., some apps are more popular than others, some apps are given away free because of their lack of commercial value — Vogel said that digital represents somewhat of a "culture conflict" at USPS. He said the Postal Service tends to engage in big activities, "but digital is about doing hundreds of little things all at the same time and allowing a lot of them to fail." Vogel added that the USPS would use a lean development process to try a lot of things, let go of the ones that don't resonate and keep a constant churn of ideas, expecting that some will fail.

Rapidly Changing Marketplace Necessitates Flexibility
Another challenge for the USPS is that the digital marketplace changes rapidly. The USPS isn't known for being fleet of foot in terms of its ability to bring new products and services to market. "The average app lasts about 18 months," Vogel said, "so the market changes quickly." He told customers that the USPS has limited resources as well as a lack of the right resources, forcing it to look for partners, development agents, coders, etc. to work on digital initiatives.

Two areas the USPS plans to initially focus its efforts on are its role as a trusted platform that can connect authenticated users to businesses and agencies for "personal business" transactions through secure messaging, as well as building a consumer platform.

The USPS is assessing a platform for secure messaging of purely digital communications that are confidential, transmitted between authenticated senders and receivers, and as a result are trusted. Vogel said this type of expansion into digital services would represent a virtualization of the USPS' core principles — trust, security, connectivity and identity. He noted the federal government has been discussing such communications and has invited the USPS to take part in the discussions to see if it could be one of the operators of the system.

It's all about authentication in the secured messaging business, Vogel said. It would take a lot of service agents to put such a platform together, he added, and the USPS cannot do it all. It could do in-person proof of identity, but not all the other sophisticated look-ups needed for secured messaging.

However, Vogel did say the USPS Inspection Service, the law enforcement arm of the agency, could oversee secured messaging, which could bring real value to the overall messaging community. He added that it would take some time to think it all out, including what pieces are needed to make the service robust. "We think someone needs to provide this service, and that it should be us," Vogel said.

Retail Partners Emerge
On the second front, the USPS is currently testing a consumer platform via the development of an app that provides a customizable dashboard which enables customers to personalize an aggregated mail and package status view across multiple carriers. This service will provide a convenient and personalized way to monitor and manage mail and packages. The app offers a single site to view all inbound package information as well as a single shipment-tracking tool. The USPS has already gained commitments from several e-commerce retailers that are willing to participate, with evaluations being performed by Amazon.com, eBay, Etsy and others.

The USPS is looking at different ways to customize the tracking views as well as assessing advertising potential. It's currently alpha testing the dashboard and said its DSG gradually will expand the user base to test platform features and pricing in the marketplace to ensure stability before a full public launch.

Vogel told customers that the USPS wants to hear ideas from them on digital solutions it could provide. He said the USPS soon will launch a website where users can submit ideas. Vogel stressed that the mailing community must be part of the USPS' assessment process. The Postal Service plans to invite a group of customers to its "virtual lab" to be part of alliances and its go-to-market strategies.

Kathy J. Siviter is the president of Postal Consulting Services, a consulting firm serving commercial mailers. Kathy can be reached at kathys@postalconsulting.com.