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Post Office Cutbacks: How Will They Effect Commerce?

Small, rural businesses could feel greatest impact

November 2011
Payments, invoices, and marketing solicitations all are normally sent electronically nowadays, resulting in a drop off of demand for U.S. postal services. In fact, the U.S. Postal Service (USPS) recently announced that it would close locations and curtail certain services. But is the Postal Service's recalibration a mere symptom of the digital age, or could it stand to influence where a business locates, relocates, or expands its operations?

Some feel the effect on business location is trivial. "The USPS, which was established in 1775 and became self-sufficient in 1971, no longer has a viable business model long term and at its current size," says Jeffrey Rogers, president and COO of Integra Realty Resources located in New York City. "The fact that there is less demand for USPS services is evidence that Saturday delivery is not a necessity. The volume of mail on Saturday is already less than on any day of the workweek, and other countries have already eliminated Saturday delivery. Thus, this action will have a minimum effect on commerce," notes Rogers.

Taking Business Online
According to U.S. Postal Service representatives, one specific reason that demand for their services has suffered is the growing usage by businesses and consumers of online bill payment processing. While many businesses have used electronic data interchange for a while, one just can't ignore the significant benefit that it affords.

"For businesses that mail invoices and receive return payments through the mail, a five-day delivery schedule could add 1-2 days to the time it takes to get paid," says Mitch Rose, VP of Marketing for Jamesburg, New Jersey based Billtrust - a company that specializes in online payment portals for businesses. "A company that issues a few thousand bills per month could expect tens of thousands of dollars in receivables to languish undelivered, thereby negatively affecting cash flow. Compounding this is the possibility of the elimination of a delivery day in the middle of the workweek," notes Rose.

"These days, a business can be anywhere, and they are - and [they] do their business electronically and seamlessly, and generally more economically from more remote locations," says Dr. Billie Blair, president and CEO of Change Strategists, Inc., an international management consulting firm with offices in Los Angeles and Austin. According to Blair, "Electronic services allow [a company] to replicate sitting in downtown Los Angeles. The electronic age has definitely allowed businesses to leap-frog over the earlier constraints of physical location."

What About Rural America?
But not everyone shares Rogers' or Blair's viewpoint. Small businesses - especially rural ones - often have a greater reliance on the U.S. Postal Service. "A curtailing of Saturday operations by the U.S. Postal Service will without a doubt have an adverse effect on commerce," says Jerry Kremer of Empire Government Strategies, a New York-based grassroots lobbying and government relations firm focused on economic development. "Smaller businesses in rural and suburban communities will be inconvenienced and forced to delay shipping of their goods and materials. As businesses in urban areas have more access to other competitive shipping outlets such as FedEx and UPS, they will suffer less harm."

Nonetheless, according to a recent report from Postmaster General Patrick Donahoe to Congress, delivering mail alone will no longer sustain the system. But, how Congress ultimately modifies the USPS may have far-reaching effects.

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