E-Commerce Drains Billions of Letters from Post Office

Newly released figures show a continuing steep decline for U.S. Postal Service first-class mail, thanks to increased e-mail usage and e-commerce. One bright spot for the post office: Junk mail is beating spam.

The traditionally long lines in post offices during the holiday season are noticeably shorter this year, and figures released Wednesday show why.

About 1.1 billion fewer pieces of snail mail were sent in 2004, and thats on top of an almost 3.5 billion drop from 2003 and a 1.3 billion drop from 2002. All told, the governments figures show that Americans sent 103.7 billion pieces of first-class mail in 2001 and only 97.9 billion pieces in 2004, a loss of some 5.8 billion pieces of mail or about a 6 percent drop.

Paul Harrington, a spokesman for the U.S. Postal Service, blamed the first-class decline on technology. E-mail is clearly a culprit, he said, but fax, instant messaging and various other forms of electronic communication are also playing a role.

Although this may be a bad sign for the future of the handwritten letter to grandma, Harrington says this is much more a business issue, with business communications still accounting for the vast majority ("high 80s," he projects) of all first-class mail.

The ability for many companies to collect payments by wire transfer, PayPal, direct deposit and even credit cards is taking a huge bite out of the checks that get mailed to businesses. And Web bill access is starting to shrink the number of bills that have to go out.

/zimages/3/28571.gifTeenage consumers are also changing the way Americans use the post office. To read about other ways retailers are struggling to sell to teens, click here.

"Many vendors are accepting payment online. Were reaching the point where it appears that there is not going to be a continuous growth of first-class mail," Harrington said. "That was one of the assumptions we operated on for a very long time."

Package shipments are a different story. From 2000 through 2002, package shipments started to decline—from 1.13 billion pieces in 2000 to 1.09 billion in 2001 and 1.07 billion in 2002.

That multiyear dip had been attributed to e-commerce players taking over shipments of tons of packages—especially around the holidays—and opting to use Federal Express, Airborne, DHL and UPS a lot more than the post office.

Much of that initial package loss, Harrington said, was because the post office was still "highly regulated" and therefore couldnt offer the same kind of discounts and special incentives that private companies could.

Next Page: Reversing the slump.