Strategies for Preserving the Value and Volume of Mail Worldwide

An Examination of Key Trends

A Presentation to the Long Island PCCApril 2015

Who and I and Why am I here?

• I am not a mailer. I represent the people that fabricate envelopes and packaging.

• I am also a Postal Historian and have studied the history of Posts across the globe.

• Our association represents envelope and packaging companies in 38 nations. We represent 60 percent of the envelopes and packaging produced worldwide.

• We are on the cusp of some dramatic changes to our industry but we will transcend them.

Why Preserve the Value and Volume of Mail Worldwide?

• Because we are a big industry –almost $3 trillion in economic activity world wide. We are as big as oil and natural gas and the airline industry, yet we act like a small industry.

• We don’t talk to each other enough about the value of the product we sell and we don’t talk about it to others. We need to do more to promote the value of the product we sell.

• We get entangled in the “weeds” of making the mailing system work and we don’t do more to promote the value of the mailpiece. We must do better.

Mail is Changing in our Ever-Changing World

• Mail is a critical part of our global and national communications market. It goes hand in hand with other technologies.

• In the next decade, mail and digital commerce will quickly merge but physical mail will still be here. It does mean we have to look at the mail experience from the customer back.

• We have only built the first half of the system; we need to send mail everywhere, any time. An IMb coupled with a Geocode will put you within 10 meters of any location on the planet. But we have to learn to market that value.

Facts about mail

• It is declining by four percent across the globe but the decline has been slowing in the last two years. We are now seeing areas mail has found a new level in integrating with the intelligent phone.

• Most people still look at the mail across the globe. They study it five times more than an email message. Almost 70 percent of all electronic banner ads are never seen. Over 30 percent of the globe does not have regular access to a computer and there are many messages that an intelligent phone just cannot display.

• 70 percent of the transactional mail customers that we have surveyed (InfoTrends 2013 Study) want their billing document in paper. They may pay it digitally but they want evidence of the transaction.

• We also know that the drivers of mail are the general economy, the price of the transaction and SERVICE!

• Technology is there and is important but it has not had much of an impact on mail volume in the last two years globally.

Changes to the PostsFrom To

Ownership State Public

Focus Letters Parcels, DigitalServices and Letters

IndividualPost Offices

Post Offices Owned by State/Post

DecentralizedOwnership

Universal Service

Six Days Per Week

Five Days or Less Per Week

Mail Volume Stable, Slowly Increasing

Declining, Slowly Decreasing

Market Competition

Very Limited Slow Process of Market Liberalization

Mail Volume by Type and Totals(2009-2015)

Estimates Beyond 2014Data in Billions

0

20

40

60

80

100

120

140

160

180

200

First Standard Total Vol

2009201020112012201320142015E

• 88% believe that paper format should continue to be provided to those who want it.

• 65% of adults want to continue to receive at least some bills & statements in paper format.

• 69% responded that private sector companies should NOT be allowed to force a shift to digital.

• 90.4% believe that companies should NOT be allowed to chargefor paper-format.

8

Bills and Statements

• When answering the question, “Which of the following do you think poses the greater threat to the environment?”– 79% - Discarded Computers &

Printers– 21% - Paper Bills & Statements

• 87% believe that the main reason companies want to shift customers to electronic delivery formats is to save money, NOT to be environmentally responsible.

• 89% agree that “Trees are a crop, just one that takes 15 to 20 seasons to grow instead of a single season.”

9

Environmental Beliefs

• Nearly 73% of Seniors still prefer paper format– American Seniors believe it is

wrong to make anybody go on line to receive or pay bills.

• 87% of Americans age 65 and over responded that “a paper check in the mail should always be accepted.

• 79% of Seniors report that shifting customers to online only benefits the company.

10

Seniors – Age 65 and above

• Younger Americans (between the ages of 18-24) remain opposed to being forced to shift from paper format to electronic / digital formats.– 62% still prefer paper

format/delivery for some or all of their bills and statements.

– 59% believe it is wrong to makeanybody, regardless of their situation, go online in order to receive or pay bills.

– 64% responded that “a paper check in the mail should always be accepted without any fee or penalty, even if other forms of payment are available.”

11

Millenials -Age 18-24

• A shift to online/digital format would have negative impacts on more than 1/4th of the Adult American population.

• American Adults believe it is wrong to restrict paper-based information and services.– 89% responded that some

groups, such as the elderly, disabled, low income, and poorly educated would be disadvantaged.

12

Disadvantaged Households

Speed of Change is Increasing...

Call to Action Capture Resulting Action

Mobile-on-Mail

Mobile-on-Mail campaigns require a call-to-action, specific technologies to capture it, and a value added result

ScanQR Code, SnapTag, Watermark

TapNFC

DialPhone Number, Star-Star Dial

Feature Phone Dialer, SMS

Smart Phone/ TabletCamera, Applications (3rd Party, Retailer or USPS)

LearnInstructions, Reviews, Information, Augmented Reality

SaveCoupon, Loyalty Card

ShareSocial Media, Blogs, Email, Pinterest

TextShort Code

Next Gen DeviceNFC Chip, In2Pay iCAISSE

Pay Purchase, Bill Pay, Donation, Postage

ContactCustomer Service, Confirm Receipt of MailPlaySweepstakes, Games

AuthenticateSignature, Account Login

World Graphic Paper DemandIs the global market in decline?

-15%

-10%

-5%

0%

5%

10%

15%

110

120

130

140

150

160

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Volume (L)Percent Change (R)

Million Tonnes

15 © Copyright 2014 RISI, Inc. All rights reserved.

The Envelopes of Our Future will be different than the Envelopes of our Past!

Actions you should think about!

• Don’t think that a short term gain means a long term shift. The market is slowly improving but there are still changes in front of us.

• Companies that are successful will be more diverse and produce more than envelopes.

• Stay out of big debt.• The efficiency of management means everything - train and develop good

leaders.• Develop and deploy new technologies with a passion. It is a different

world ahead of us.• The future will be different, the lessons of the past don’t mean anything. • LEARN every day!

Summary

• Mail will be here in the future, the power of personal communication is far too important to go away. But we have to innovate to move forward.

• Keep in mind that people want it on paper; there is an importance for physical communication.

• Digital printing capability is a must moving forward. Too much opportunity to ignore.

• Most companies will do well; they are the right size for the market that is emerging. You just have to dodge the dumb player.

• Smart management and sales staff will pay off. It will not get better soon in terms of values but it will get better in the long run.

• We will all still be here in 2020.