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DIGITAL MANAGER

8.11.99  
Will E-Postage Stamp out the Postal Meter?
The cyber alternative to meters and stamps has big pluses and — a few bugs

E-postageJay Conner had his hands full as he readied Great Fermentations -- his San Rafael (Calif.) home-winemakers' supply store -- for a wine-tasting contest earlier this year. He was so busy that he barely had time to alert customers.

Luckily, Conner was testing Internet postage. Two companies, e-Stamp and Stamps.com, unveiled the first offerings with great fanfare on Monday, though Stamps.com's service won't be nationally available until sometime in September. Conventional postage-meter suppliers Pitney Bowes and Neopost are also testing similar products. Conner (who used e-Stamp) pulled off his mailing. The system let him print postage and addresses simultaneously. "We got 350 postcards out on very short notice. Before, it would have taken all day. Turns out, we got a nice turnout and won seven gold medals," he raves.

We checked out E-postage and found that its big advantage over conventional meters is its addressing capability. It also takes less time to get an account. Another plus: The E-postage debutants look a lot cheaper than traditional meters, though price comparison is tricky because there are so many variables. What's the downside? Inconvenient Postal Service requirements that aim to foil counterfeiters may drive you back to licking stamps for all but big mailings.

First, some background on conventional postal meters. The Postal Service issues you a permit to lease a meter. Monthly lease fees for small-office meters range from around $20 to $40, and ink and reset fees can add another $20 to $30, depending on use patterns, Beacon Research Group found last year. (See "How to Lick Postage Costs," Business Week frontier Online, June 22, 1998) That's before postage costs. Customers buy postage electronically, recharging their meters via modem. The meter prints an official post-office indicia, or postmark, on each piece of mail.

E-postage users will see one difference right off: It takes about a day to get a permit, vs. one or two weeks for a conventional meter. At either company's Web site (www.e-stamp.com and www.stamps.com), you'll fill in a registration form -- simultaneously setting up your account. The companies handle the formalities, and you'll get an E-mail message when your account is ready.

Now, you need to install the software. E-Stamp's setup includes a counter that plugs into your computer's printer port. (You plug the printer into the device.) You can buy the e-Stamp software-hardware package for $49.95 at a software or office-supply store, or you can download the software from the Web site. The company mails you the device after you register. Stamps.com's software downloads for free from the Web.

From here, you'll bump into some annoying bureaucracy. The Postal Service wants these programs to print addresses with proper ZIP codes. So both programs force you to cue up the ZIP-code verification systems when you use them. For e-Stamp, that means inserting a CD-ROM ZIP-code directory in your drive before you can load the program. For Stamps.com, the program must check the same database via the Internet before it will let you print. The Postal Service updates e-Stamp's CD-ROM (sent automatically to customers) and Stamps.com's online database every few months. (Note: they may not include addresses in new neighborhoods.)

With the software loaded, you can now buy postage. Both companies charge a 10% basic markup, or "convenience fee," on postage, with minimum and maximum charges that amount to strong incentives to buy in volume. E-Stamp has a $4.99 minimum and a $24.99 maximum. Stamps.com's Business Service Plan has a monthly minimum of $3.99 and a maximum of $19.99. (Stamps.com also has a different fee plan geared to buyers of less than $40 a month of postage.) The programs send instructions to the companies' postage servers and download authorization to print the amount you purchase, debiting your bank account. Come fall, the Postal Service is expected to allow credit-card purchases as well.

E-Stamp stores up to $500 worth of postage in the hardware. Stamps.com makes you log on to the Internet to purchase postage and stay online while you print your envelopes. E-Stamp says that difference is worth its $50 price. Nicole Eagan, senior vice-president for marketing and sales, says most small-business data lines double for phone or fax: "It's important that they get their postage and get offline."

To use the address functions, you add names manually or import them from your contact manager. Select the recipients, then click on buttons to set the amount of postage and class of service. Put envelopes or postcards in your printer. Click to print the address and the postal indicia, which contains the postmark plus a bar-code representation of the address.

Here the Postal Service complicates things again. You can't E-stamp envelopes and address them later. And the address and the indicia information must match -- or the Postal Service will return your envelope. The only way to assure they match is to print the address and postage at the same time. That makes it a hassle to use envelopes with preprinted addresses. To get around that, both programs let you print the indicia and address on separate labels. You press the indicia label on the preprinted envelope and throw away the address label.

For all its annoying quirks, Internet postage is economical, though the folks at Pitney Bowes insist it won't supplant meters. "Our current product line starts quite a bit higher than PC postage," acknowledges Kevin Weiss, president of Pitney Bowes Office Direct. But, he notes, postage meters are faster and don't require PCs or Internet connections. Weiss says he thinks that today's stamp lickers will get hooked on automatic postage via E-postage and eventually graduate to meters. A Pitney Bowes spokesperson adds that the addressing capabilities make PC postage great for mailings, but company research shows that 80% percent of small-business mail consists of individual letters or bills in preprinted envelopes. And for those purposes, E-postage is more time-consuming. OK, so you might not want to throw out your old postage meter just yet. Still, any technology that saves people from waiting in line at the post office is a step forward for humanity.


By David Haskin in Madison, Wis.

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