December 24, 1999 Web posted at: 8:56 a.m. EST (1356 GMT) by Eugene Grygo

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(IDG) -- Forseeing the challenge that electronic-commerce poses to its traditional delivery services, the U.S. Postal Service is seeking to greatly expand its e-commerce capabilities in the next year through partnerships and an "e-post office box" initiative.

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Although the Postal Service has been accused of being late to the digital marketplace, the government agency believes that it can leverage its capability of serving millions of consumers and businesses by beefing up its back-end electronic fulfillment capabilities and effectively complementing mail delivery with e-mail and e-commerce services.

The e-post office box will be a service offered to both consumers and businesses for delivery of electronic mail, as well as services such as bill presentment and payment, said Bob Krause, vice president for e-commerce at the U.S. Postal Service, in Washington, D.C. The new e-post office box will be an extension of the Postal Service's online initiatives, Krause said.

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"We're not going to become an Internet service provider. We're going to be the connector, and we're going to offer [consumers] a choice," Krause said. "American consumers [will] be more demanding, not less."

The new e-post office box service, offered as if it were from an e-commerce start-up, is not meant to be just a portal. It will be made available via the Postal Service Web site or through ISPs, Krause said.

Meanwhile, in an effort to fend off industry heavyweights United Parcel Service and Federal Express, the Postal Service will be trying to force more existing e-commerce sites to use its fulfillment and delivery services.

Although the move marks the beginning of a concerted push to compete in the digital economy, observers say it could be too little, too late. Citing consumer demands, industry analysts say this pending e-post office box service may not help the Postal Service as it tries to keep up with its e-mail competitors -- unless it offers a stronger hook.

The Postal Service has a bit of an uphill battle when facing Yahoo and other free e-mail providers, according to Carl Howe, research director at Forrester Research, in Cambridge, Mass. "I don't know [that] they're going to get it cheaper than free," Howe said. There's also a problem with perception among users. "The post office is not the place to look to for the next greatest thing on the Internet," he said.

Echoing Howe's concerns, Dana Gardner, an analyst at the Aberdeen Group, in Boston, adds that the Postal Service has "the ultimate directory" and, with its enviable fleet of trucks and army of mail carriers, has conquered the "last mile" delivery problem faced by many in e-commerce. "That's why Amazon.com is using the Postal Service," he said.

The new e-post office box service and other e-commerce initiatives of the Postal Service might actually serve as a segue to a time when most mail and messages will be electronic.

"[However], it seems that the Postal Service is awfully late to the game," Gardner said. "I think they need to be more creative and aggressive than their counterparts in the private sector."

The new service will conform to a "sender-paid model" in which the sender -- needing a link to consumers with at-home access to e-post office box -- would pay for the service, Krause said.

For example, the sender, a bill collector, would pay for this access to consumers via the Postal Service's electronic postmarking and digital certificate/public key infrastructure capabilities, and could include an electronic self-addressed, stamped envelope, he said.

The Postal Service is legally barred from selling the usage of its "ultimate directory," and will not reveal the addresses of recipients; consumers, however, can volunteer information to "senders."

The goal is to help the sender cut costs over traditional paper-based billing systems. Even if the mail cost decreases slightly, "you're making money," Krause said.

To add another layer of security -- and differentiate itself from e-mail providers -- the Postal Service will be inaugurating an identification process that would be similar to getting a passport, Krause said.

In a related initiative, the Postal Service has proposed the U.S. Postal Rate Commission, a new "Mailing Online" electronic-messaging system at small-to midsize companies that would allow them to e-mail documents such as newsletters or advertising or promotion pieces to a printing company working with the Postal Service, but not bill-paying services.

Overall, the Postal Service is anticipating a wave of e-commerce initiatives. About three months ago, it released free Web tools for third-party links to its site. The shift to e-commerce is just beginning, Krause said, adding, "We haven't seen full-blast yet."