Implications of Electronic Mail and Message Systems for the U.S. Postal Service

Chapter 4

Market Penetration Results

Introduction

This chapter presents the results of the mar
ket penetration analysis using the model and
technology assumptions described in chapter
3. The primary use of the model here is to
estimate future levels of conventional and elec
tronic mail volumes under a variety of condi
tions.
To recap, the starting point for the model
is the baseline mainstream, which is then
broken down into a number of different sub
markets (classes or subclasses of mail). The
model estimates the maximum potential frac
tion of each submarket which appears to be
suitable for handling by (i.e., diverted to) elec
tronic funds transfer (EFT) or electronic mail
and message systems (EMS). Then, based on
specific assumptions about the relevant tech
nology, the model estimates the rate and tim
ing of penetration of EFT and/or EMS into
each submarket.
For each submarket, the model is thus able
to estimate the portion of the mainstream that

would be diverted to EFT and EMS and the
portion that would remain as conventional
mail. OTA has assumed that, unless otherwise
indicated, the U.S. Postal Service (USPS)
would deliver the hardcopy output of EMS
services but not the electronic output. The por
tion of the mainstream diverted to EMS is fur
ther divided into Generation II (defined as
EMS with hardcopy output and delivery) and
Generation III (defined as EMS with elec
tronic delivery). The total remaining USPS
mainstream for any given set of assumptions
will then be the sum of all submarkets of un
divertable conventional mail (mail not suitable
for electronic handling), plus residual conven
tional mail (mail that is suitable for electronic
handling but has not yet been diverted), plus
Generation II EMS volume. As defined in this
study, Generation III EMS and EFT both in
volve electronic delivery and therefore are
assumed to be completely outside of the USPS
mainstream.

Base Case Results (High But Plausible
Generation II EMS Growth, 2-Percent
Underlying Mainstream Growth)

The results of the market penetration anal
ysis for the high but plausible Generation II
EMS growth alternative under the baseline as
sumptions are shown in figure 3.
Under the base case, assuming a 2 percent
growth rate in the underlying mainstream,
USPS delivered mail (conventional plus Gen
eration II EMS) would rise to about 118 billion
pieces by 1990 and then decline to about 89
billion pieces in 2000. By 1995, USPS de
livered mail would be about equal to the 1980
USPS mail volume of 106 billion pieces. Con

ventional mail would have declined signifi
cantly as a percentage of total mail, from
about 94 percent in 1985 to only 47 percent
in 2000. Thus, conventional mail would con
stitute less than one half of the total mail
stream, although still representing a substan
tial absolute volume of about 75 billion pieces.
In contrast, the combined total of EFT and
EMS would have risen from about 5.6 percent
of the total mainstream in 1985 to about 53
percent in 2000. Of the roughly 85 billion
pieces of "electronic" mail in 2000, Generation
III EMS would account for about 56 percent,
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United States. Congress. Office of Technology Assessment. Implications of Electronic Mail and Message Systems for the U.S. Postal Service. UNT Digital Library. http://digital.library.unt.edu/ark:/67531/metadc39480/. Accessed July 12, 2014.