USPS, Microsoft Focus on SOHO Market

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The U.S. Postal Service has implemented several programs recently to reach the small-office, home-office (SOHO) mail market, including one that lets small businesses print stamps on their computers.


The initiatives include the Information-Based Indicia (IBI) program; a trial test of Post Office Online, which allows businesses to print Priority or Express Mail labels, track packages and confirm deliveries online; and a partnership with Microsoft. The software giant will include in its new Office software an application called Direct Mail Manager, which allows small businesses to create automation-compatible mail.


Simply put, postal officials think that targeting small businesses is a great business opportunity.


"According to market research, almost 48 percent of small businesses use direct mail, and we expect the number to continue to grow significantly as [it] helps them obtain and keep customers," said Catherine Kinney, core business marketing manager at USPS.


<B>IBI program:<B> Launched late last month, the IBI program lets customers buy stamps online and reduce postage fraud.


A small-business owner buys or rents USPS-approved manufacturer's hardware or software. Although systems vary, usually the hardware -- which is similar to a postage meter or a small modem -- attaches to a personal computer's serial port and allows users to automatically add postage to their meters when they are connected to that manufacturer's Web site.


The user selects the amount of postage desired online and presses "OK." The customer's credit card is debited and the postage is downloaded and stored in a security device. Each electronic stamp includes the postage amount, the name and ZIP code of the local post office, the date the postage was printed, the rate category, an electronic barcode containing the same information, an ID number of the printing device and a unique digital pattern. As the stamp is printed on an envelope, the software will deduct the postage from the security device.


Although system fees vary,transactional fees are nominal, and hardware rental costs about $10 per month.


Postal officials are sure small businesses will benefit from this system


"Basically, the program allows the user to come up with a form of evidence of postage like a postage stamp or meter impression, except that the purchase and application of postage evidence is done with personal computers, and a two-dimensional barcode is also incorporated for security functions," said Roy Gordon, program manager of IBI.


As the barcode contains a digital signature pattern, it can determine whether there are duplicates in the mail stream and whether the barcode is authentic. The USPS said the system will improve operational efficiency and reduce the millions of dollars lost annually to fraud. The system isn't mandatory, and customers still can use other methods.


E-Stamp Corp., Palo Alto, CA, is the first vendor approved by the postal service. It has begun beta testing in Washington, and trials are expected in the San Francisco Bay area and Tampa, FL, shortly. Other mail-equipment suppliers, including NeoPost, Hayward, CA; and Pitney Bowes Inc., Stamford, CT, also are seeking approval for their technologies.


According to the USPS, the system is popular among Standard A mailers. Its survey of Mailers Technical Advisory Committee members said services such as tracking, real-time notification of nondelivery and request for forwarding would all be available as a result of the program.


Post Office Online: This USPS-sponsored initiative will let SOHO businesses send mail, print Express and Priority Mail labels, track packages, confirm Priority Mail deliveries, order supplies and schedule pickups online.


The system, which is on trial in Tampa and is expected to roll out later this year, includes a component called Mailing Online, which allows small businesses to send small text and graphic mailers electronically to a USPS-approved printing and mailing service provider. The mail is guaranteed to enter the mail stream within 24 hours of receipt.


This phase, which also is in trial in Tampa with 50 customers, is being watched by the mailing services industry. Many of these lettershops offer their customers similar services, and when the program is fully rolled out, they may want to be considered in the pool of service providers used in creating and mailing the final product.


"Clearly, we are concerned that many of the companies the postal service is focusing on for this initiative have 20 or fewer employees -- the same-size companies that use our member services," said Barry Brennan, director of postal affairs at the Mailing Advertising Services Association, Alexandria, VA.


But the postal service said that those individuals who have success with the program on a small scale will expand to more sophisticated programs and then will seek the services of a professional lettershop to assist with more elaborate mailing plans, especially since the options in Mailing Online are limited.


"There is a possibility that this will benefit us," Brennan said, "but we don't know how it will play out. It depends on how the USPS allows the service provider to participate in the future."


The first full-scale phase, expected to begin in June, will include only First-Class mail. The program will include Standard A Mail when it is presented to the Postal Rate Commission later this spring as an experimental filing. In addition, it will appear in the Federal Register for public comment soon.


Microsoft's Office 97 Small Business Edition v. 2.0: The postal service recently announced its involvement in the latest version of this software, which includes Direct Mail Manager. It is designed to give small businesses tools for creating, printing, mailing and managing direct mailings.


Under the partnership, an electronic version of the postal service's "Direct Mail Services for Small Business" publication is included in the product, and users can match addresses and verify mailing lists through an online connection and comparison of the CASS USPS national ZIP+4 address database. (Envelope Manager Software, Palo Alto, CA, built this product for Microsoft, and its Dial-A-Zip technology allows users to perform online address verification.)


Direct Mail Manager lets users check a mailing list for correct address, postal codes and duplicates, cutting the extra cost of mailing to nonexistent addresses. It is PAVE-approved for Standard A regular rate letters and is limited to 3,500 addresses per presort mailing.


Postal industry watchers said the partnership is a good move.


"This could be the start of something big for the postal service," said Marcus Smith, publisher of Postal World, Rockville, MD. "USPS should push other [software] makers to follow suit. Big new volume is possible. They should find [additional] ways to make it easier for SOHOs to enter mail."


The product will include an Internet-based "mailroom" that allows users to design, print, address and mail documents such as fliers, brochures, postcards and letters using NeoPost's mailing software product, NeoPost Express. DirectNET software from Pitney Bowes also will be incorporated. It will let users design and send assembled mailings to customers.


Users also will be able to access American Business Information's Web site directly from Direct Mail Manager to download mailing lists and retrieve business profile credit reports.


Microsoft Office 97 Small Business Edition v. 2.0 costs $249 for current Office product users and $499 for new users.
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