Westlake Village, CA – August 24, 2009 – Zumbox, the world’s first and only paperless postal system, today announced the closing of its Series A funding with a total of $8 million raised. Investors include Art Bilger (Managing Member of Shelter Capital Partners, LLC) Rick Braddock (Chairman and CEO of Fresh Direct and former Chairman and CEO of Priceline.com), Michael Eisner (Founder of The Tornante Company and former CEO of The Walt Disney Company), Bill Guthy (founding principal of Guthy-Renker) and Donn Rappaport (CEO of Zumbox and Founder and Chairman of ALC).

Zumbox has created a web-based platform that powers the world’s first paperless postal system. The company has created a digital mailbox – a Zumbox – for every street address in the country. Postal mail can now be sent as digital files and received online, with no paper, printing or postage, and no scanning.

Zumbox represents the first practical alternative to traditional postal systems. By using Zumbox, businesses and other organizations not only enjoy significant reductions in their mailing costs, but also substantially reduce their environmental impact. Consumers enjoy greater convenience as well as a richer mail experience by accessing their mail online, going paperless, and receiving multimedia content in an entirely new and innovative way. Zumbox also represents an important alternative to commercial e-mail. Zumbox is secure (it is a closed system with bank-level security); it is based on an individual’s permanent street address as opposed to his or her e-mail address (providing greater accountability and reliability); it offers rich media capabilities; and Zumbox is spam-free.

“Despite a severely challenging economic climate, we were able to successfully complete this round of funding,” said Zumbox CEO, Donn Rappaport. “New investors include some of the most well-known and widely-respected names in the technology, marketing and entertainment industries.” Adding, “Zumbox is an idea whose time has come. We see their support as a testament to the fact that the world is ready for this new communications medium.”

Following a successful pilot in New Lenox, IL, Zumbox has exited beta and will launch the first stage of its national rollout starting in Q4 of this year. The company will facilitate delivery of paperless mail to approximately one million households in select markets through partnerships with municipal governments and media companies as well as both national and local mail senders.

“Zumbox has truly created a new communications medium, one that’s certain to be as valuable as it is disruptive,” said Rick Braddock, Chairman and CEO of Fresh Direct. “By combining the unique address system of the USPS with the power of Web 2.0, the company is revolutionizing how content of all types can be distributed, accessed and consumed.”

In a request filed with the Postal Regulatory Commission, Gamefly, a company that rents game DVDs via the mail, seeks to compel the US Postal Service to provide information the USPS says is off-limits.

In its motion, Gamefly says:

In its objections, the Postal Service seeks to place three kinds of information offlimits to discovery: (1) information about any aspect of preferential treatment received by Netflix other than the degree of manual processing of return DVD mailers; (2) information about the treatment received by DVD rental companies—other than GameFly—that have smaller mail volume than Netflix and Blockbuster; and (3) certain information about the Netflix-only drop slots at local post offices. These restrictions are unfounded.

Gamefly points out that the USPS has already admitted that Netflix receives special treatment:

The first issue has been resolved by the Postal Service’s own statements in this case. The Postal Service initially asserted that it had abandoned its practice of giving manual culling and manual processing to “the largest movie DVD providers” in the wake of the November 2007 report of the Office of Inspector General, and specifically “denie[d] that any ‘large percentage’ of inbound movie DVDs are processed manually.” Since GameFly began discovery, however, the Postal Service has admitted that the preferential treatment given to Netflix has continued or even increased since the OIG report. The Postal Service’s August 14 response to GFL/USPS-18, for example, admits that “the amount of manual processing of Netflix mail is likely at least as large as was set forth in the [Office of Inspector General Audit] Report, though no specific percentages are available.”

The Gamefly motion concludes:

A variety of information indicates that the Postal Service’s preferential treatment of Netflix is driven primarily by a desire to cater to a large customer, and that the operational needs that supposedly justify this discrimination are pretexts.

(1) Perhaps the most telling sign is the inability of the Postal Service to keep its story straight about whether it is discriminating at all. As noted above, at the outset of this case the Postal Service represented to the Commission that the practice of giving manual culling and manual processing to “the largest movie DVD providers” had been abandoned in the wake of the November 2007 report of the Office of Inspector General.
Since then, however, the Postal Service has admitted that Netflix DVD return mailers get at least as much manual processing as in late 2007.

(2) In response to GFL/USPS-28, the Postal Service asserts that dedicated mail slots for Netflix DVD mailers in “lobby drops available for the public to deposit mail” are “against current Headquarters policy, as detailed in the attached Retail Digest.” USPS response to GFL/USPS-28 (filed August 14, 2009). The attached headquarters directive states that: In an effort to accommodate Netflix mail, some offices have created special mail drops and signage for Netflix returns. This is not an
authorized use of mail drop slots and it has legal ramification [sic] for the Postal Service.

The headquarters directive is an admission that this form of preferential treatment for Netflix has no operational justification; and the “legal ramification” alluded to is presumably liability for discrimination under 39 U.S.C. § 403(c).

The USPS sent the following notification to the APWU Western Regional Coordinator outling possible consolidations of Computerized Forwarding System units in the Western Area:

August 4, 2009

Omar M. Gonzalez
Western Region Coordinator
American Postal Workers Union, AFL-CIO
500 Airport Blvd. Suite 450
Burlingame, CA 94010-1940

Dear Mr. Gonzalez:

Please be advised that we are considering consolidating Central Forwarding System (CFS) offices within the Western Area as follows:

• Spokane to Seattle
• Portland to Seattle
• Fargo to Minneapolis
• Sioux Falls to Minneapolis
• Billings to Denver
• Wichita to Kansas City
• Des Moines to Omaha
• Boise to Salt Lake City
• Las Vegas to Salt Lake City and Phoenix

This will impact the employees in the losing CFS units. Reassignments will be made pursuant to the provisions of Article 12 by each affected district office. We will provide you updates as information becomes available.

Sincerely,

Chris A Jordan
Manager Labor Relations
Western Area

More Western Region Impact Statements are located here. Statements for the rest of the country can be found at the APWU Regional Coordinator’s pages at APWU.org.

Reports filed with the Postal regulatory Commission show that as of July 17, the US Postal Service has reduced its field staff by 5.7%, or 37,454 employees from the same period last year. (All numbers cited refer to actual employees on the rolls, not authorized positions).

The largest reductions among bargaining unit employees, as in the past, have come in the clerk craft, which lost 16,023 employees, or 8.1%. City carriers were down by 5.2%, or 11,135 employees. The smaller mail handler craft lost 2,829, or 5% of its members. Career rural carriers, who are compensated on an evaluation basis, and generally earn significantly less than their city counterparts, lost just 974 employees, or 1.4%.

Supervisors, managers and administrative staffing in the field was reduced by 3,468 employees, or 8.4%. Headquarters lost 88 staff, or 3.1%.

The bad news for the USPS is that the complement reductions so far have not translated to any significant cost reductions. Thanks to salary and benefit increases, the USPS has paid out almost exactly the same amount in base salaries and benefits this year as it did in 2008. The $1 billion the agency has managed to save in compensation costs this year has come entirely from reductions in overtime. Sustaining that level of savings solely from overtime in the future will be difficult if not impossible.