USPS aims to boost revenue with special projects, but losses loom large

Tuesday - 1/15/2013, 6:26pm EST

Facing a dire financial portrait and with no legislative solution in sight, the U.S. Postal Service has instituted measures to reduce operating costs.

But the Postal Service can't only cut its way to financial viability. In an increasingly digital world of declining mail volume, it also must find ways to increase revenue, the Government Accountability Office stated in a new report.

USPS pursuing 55 new initiatives

GAO focused its report on an overview of how the Postal Service's suite of nonpostal offerings could help generate revenue for the cash-strapped agency.

Currently, USPS is pursuing 55 new initiatives designed to boost revenue. Most of the new projects are tweaks or updates to nonpostal services the agency has typically offered in the past, such as publicizing the presence of postal services at retail stores and allowing postal customers to use their mobile devices to forward mail to a new address.

A handful of the projects are more experimental, such as selling greeting cards with prepaid postage or offering same-day delivery service for local retailers. The latter, known as Metro Post — currently in a pilot phase in San Francisco — allows customers to order products online from retailers that have partnered with the Postal Service. USPS delivers those products the same day.

New revenues 'pale in comparison' to losses

However, the revenue generated from nonpostal services is "relatively small," GAO auditors said, just $173 million compared to total USPS revenue of $65.7 billion.

And the income generated by nonpostal services — $141 million in 2011 — "pales in comparison" to the $15.9 billion loss USPS suffered in 2012, GAO noted.

Still, the main reason USPS has pursued the new initiatives is to grow revenue.

While USPS officials could not provide GAO with estimates of the expected net income for all the initiatives, they estimated that just nine of them "will collectively generate a net contribution of about $240 million" in fiscal 2012.

Revenue — or the lack thereof — also played a role in the 25 potential projects the Postal Service has recently decided not to pursue. For example, USPS abandoned an identity-management service designed to educate online customers about identity theft, citing an insufficient return on investment.

Another abandoned project involved the Postal Service opening and scanning customer's mail (with their permission) to send via a digital format. USPS officials said such an initiative could "potentially damage the trust that customers have in the USPS brand," GAO reported.

USPS is eyeing three additional areas to pursue revenue-generating initiatives: Additional nonpostal services beyond the ones already authorized, shipping alcohol and partnering with state and local governments.

However, all three require congressional approval. Postal legislation approved by the Senate last spring would have allowed USPS to offer some nonpostal products and offerings, but the House never moved on its own version of a bill essentially sending postal reform back to square one.

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