Projecting US Mail volumes to 2020 Final Report – Detail

1. Projecting USMail volumes to 2020 Final Report –Detail March 2,2010

2. Objectives andapproach 1

3. Objectives of BCG'sassignment • BCG was asked to develop base case projections of mail volumes to2020 • Base Case is a business-as-usual scenario with the followingassumptions • No new revenue or cost savings initiatives beyond those already in the current USPSplan • No legislative or regulatory changes • Economy returns to historical long-term growth rate in two to threeyears • No major economic or otherdisruptions • Base Case forecast incorporates extensive, recent independentresearch • Interviews, surveys, BCG expertise, benchmarks from other countries, and commercial research 2

4. Approach • First-Class Mail: invoices, statements, ad mail,payments • Standard Mail: letters, flyers,catalogs Segmented mail into components withcommon • Other categories: magazines, packages,etc behaviors • 50+ Senders interviewed for views on future use ofmail • Average USPS revenue of $200M for sample, and representation from all major industrysegments • 3,000+ Consumers were surveyed by phone and by internet on perception of online alternatives tomail Interviewed andsurveyed Senders andConsumers • Forrester, Celent, Winterberry, Federal Reserve, etc • BCG industry experience in multiplemarkets Incorporated broad setof industry data andresearch • Developed countries with high broadbandpenetration • Also, selected US peer for directcomparison Leveragedglobal benchmarks • Leveraged USPS business-as-usual priceassumptions Projectedrevenues 3

5. Mail was classified into segments with similar characteristics and marketbehaviors First-ClassMail StandardMail First-ClassMail StandardMail Standard Mail adletters Bills andinvoices Flyers General B2Cmail Bankstatements Catalogs C2B / B2Bpayments Postcards First-Class adletters Largeenvelopes 4

6. Volume forecasts were created bysegment (%) 100 First-Class MailVolume(47%) Standard Mail Volume(46%) Bills /Invoices 22 B(12%) C2C 5 B(3%) StandardMail Ad Letters 32 B(18%) 80 2009Total 177 B(100%) Magazines 8 B(4%) Misc C2B 4 B(2%) General B2C Mail 14 B(8%) 60 Flyers 24 B(14%) Bank Statements 8 B(5%) 40 Packages 3 B(2%) B2B/B2C Payments 6 B(3%) C2B Catalogs 12 B(7%) pmts General B2B Mail 4 B(2%) 9 B(5%) 20 Large Envelopes 5 B(3%) First-Class Ad Letters 11 B (7%) Newsletters 5 B(3%) Postcards 3 B(2%) All mail volume(%) 0 Sender: Consumer Volume Business volume Both Packages Standard Magazines First Class–Consumer First Class –Business Note: segments do not sum to 177B pieces due to rounding. Source: BCGanalysis 5

7. Results 6

8. 2020 projections were then developed by aggregating segments into major mailclasses Forecast Keydrivers Forecast Keydrivers AllMail Volume to fall to approx. 150B pieces from 177B in 2009 (-1.5%CAGR) • Sharp decline in First-ClassMail • Flat trajectory for StandardMail Volume to fall to approx. 50B pieces from 84B in 2009 (-4%CAGR) • Increasing online diversion driven by increased consumeracceptance First-Class Volume to remain roughly flat at 85B pieces (+0.4%CAGR) • Online diversion of retention mail • Some share gain fromnewspapers Standard A bright spot with projected 1B piece gain (+3% CAGR) – but not offsetting loss in corebusiness • e-Commerce, includingreturns Packages Daily pieces per delivery point to fall from four to three • Declining mailvolumes • Growth in deliverypoints Other metrics Real revenue per delivery point expected to fall~30% • Declining pieces per deliverypoint • Mix shift from First-Class to Standard Source: BCGanalysis 7

9. We project a volume decline of at least 15% by 2020 vs. 2009 Pieces(B) 220 213 200 177 180 -1.5% annualdecline 160 Sender perspective 150(-15%) 138(-22%) 140 Consumer perspective 120 118(-34%) 20002002200420062008201020122014201620182020 Fiscalyear Worst-case benchmark (fromEU) 2020 projection represents 30% decline off of 2006peak 1. Senderview Source: BCGanalysis 8

10. Multiple drivers impacting volumes incoming decade First-ClassMail StandardMail Organic growth in numberofhouseholds Organic growth in number of households Growthineconomy Growth in economy Increase in online presentment andbillpay Share capture fromnewspaper First-ClassMail StandardMail Increased usage ofautopay Shift to online alternatives to acquisition mail (search ads, bannerads) Extension in billingcycles Shift to online alternatives for retention mail (e.g., email to existingcustomers) Increase in mobilepresentment Diversion to emerging hybrid mailoptions Increased diversion to private carrierdelivery Diversion to emerging hybrid mailoptions Positive trend forUSPS Negative trend forUSPS 9

11. 2020 forecast sees ongoing decline in First- Class Mail Pieces(B) 97 100 84 -4% annualdecline1 80 Sender perspective 60 Consumer perspective 53(-37%) 44(-47%) 20002002200420062008201020122014201620182020 Fiscalyear Worst-case benchmark (fromEU) 40 1. Sender view Source: BCGanalysis

12. 2020 forecast sees roughly flat volumes in Standard Mail vs.2009 Pieces(B) 104 100 Slightincrease1 Sender perspective 86(+4%) 83 80 Consumer perspective 75(-9%) 69(-17%) 20002002200420062008201020122014201620182020 Fiscalyear Worst-case benchmark (fromEU) Recovery will not revisit pre-crisislevels 1. Sender view Source: BCGanalysis

13. Most mail segments will decline by2020 First-Class MailVolume(35%) Standard Mail Volume(57%) (%) 100 First Class -Consumer First Class - Business Standard Magazines Packages Standard Mail AdLetters 38 B (26%) Bills /invoices 44% C2C ) 12 B(8%) 80 4 B(3% 18% 22% 2020 Total 150 B(100%) Magazines General 60 Misc 24% B2Cmail 11 B(7%) C2B 3 B(2% 7 B(5%) ) 17% 24% Flyers 26 B (18%) Packages 4 B(3%) 10% 40 Bankstatements 47% 46% 24% 40% 4 B(3%) B2B/C pmts 2 B(1%) C2B Sender outlook for2020 Gen B2B 3 B(2%) s 20payment Catalogs 9 B(6%) 29% % +1% ormore 0% to-24% -25% to-60% 4 B(3%) First-Class 14% 30% LargeEnvelopes 4 B(3%) Ad Letters 8 B(5%) % 26% 57% Newsletters 4 B (3%) Postcards 3 B (2%) 12% 0 % Business volume Both Sender:Consumer volume Note: based on Sender view. Segments do not sum to 150B pieces due to rounding. Source: BCGanalysis

14. Senderview Senderstell us that they see their use ofmail decliningsharply Representativequote Representativesource Representativequote Representativesource "We are planning to suppress 100% of First Class transactionmail Top fiveTelecom by 2020, and are sure that other telecom companies are moving in the same direction" "We do not see a rebound, we expect annual declines out to2020 Top five CheckPrinter of 5-7% peryear" "The goal shifted from how well I can use the mail to howmuch Top five Credit Card Mail ServiceProvider mail can I push out of thesystem" "Even if the economy recovers, we might get 50% of allmarketing Top fiveFinancial ServicesFirm mail back. The rest isgone" "Utilities see no value in sending bills to customers andare Top five Mail Service Provider offering to average the bill out over 12 months toattract consumers to sign up for recurringpayments"

15. Benchmarks from other globalposts

16. What US is experiencing is not unique—other posts all seeing erosion of volumes aswell Other posts have varying levels of broadband penetration… … defining a range in termsof mail volumeerosion … defining a range in termsof mail volumeerosion CountrieOther spostsleadinghavein broadbandvaryingpenetrationlevels1of… broadband penetration… CountrieCountriess leadingleading iinn broadbandbroadband penetrationpenetration11…… CountrieCountriess leadingleading iinn broadbandbroadband penetrationpenetration11…… Countries leading in broadband penetration1… Broadband household penetration (in % of allhouseholds) Postalvolume (% of reference year'03) 100 120 75 100 50 80 US Denmark Germany US Denmark Germany 60 03040506070809E0304050607 25 0 0809E Findings reinforced by about a dozen internet-enabled countries insample Source:OECD;Annualreportsandinterimreportslocalposts;UniversalPostalUnion;2008–2013Forresterestimates;TIA2009ITCMarketreviewandForecast

17. Mail trends in broadband-enabledcountries points to impact of broadbandpenetration Total mail1 CAGR as function of 2008 broadbandpenetration Mail volume average annual growth for each country,00-08 Denmark Norway Sweden Finland Netherlands UnitedKingdom Germany France Spain Australia Japan SouthKorea UnitedStates 2 R2 =0.57 0 -2 -4 6080100 Household broadband penetration in 2008 0 20 40 Note: Mail volumes for Japan and South Korea only available until 2007; trend lines and R2 based on data from all countries except South Korea Source: OECD, Forrester, ComScore, UPU, Annual Accounts local postalcompanies

18. Implications

19. 2020 real revenue per delivery point will decline almost 50% from 2000 Year Averagepieces First-Class Mail 2.51.8 1.0 -44 per deliverypoint per deliveryday Standard Mail 2.1 1.8 1.6 -11 -44% TotalMail 1.8 1.4 1.0 -29 Real(inflation- adjusted)revenue First-ClassMail 1.0 0.7 0.4 -43 Standard Mail 0.4 0.4 0.3 -25 per deliverypoint per day (current$) Note: based on Senderview Source: BCGanalysis

20. All reasonable scenarios suggest volumewill continue todecline • 80% of homeswith broadband • Online payments getting lesstraction • 3.3% YoYGDP growth 153B 158B 163B +10% 150B BaseCase StandardMail 144B 155B 0% 140B • 90% ofhomes withbroadband 135B 146B -10% • Privacy losesto onlinetargeting forcustomer acquisition -10% 0% +10% • 1.3% YoYGDP growth First-ClassMail Likelihood Higher Lower Note: based on Senderview Source: BCGanalysis

21. Of course, other events can significantly impact volumes External USPS-specific Catastrophic internetsecurityfailure Downstream printing/increasedworkshare External USPS-specific Significant changes to US healthcare Larger share of Ad Mail leads to greater swings inprofits National sustainability ("green")initiative Reduction inmonopolies Prolonged high fuelprices Mail-borne terrorattack Protracted recovery from current economic conditions – like Japan's "LostDecade" Do not mail list – opt-in oropt-out Regulation/legislation Economy recovers, but quasi-periodic recession returns in 8years Relaxed SEC regulations around investor communications (e.g., "Access isdelivery") Positive trend forUSPS Negative trend forUSPS 9/11-typeevent Must build significant labor flexibility on top of cost reductions

22. Structural changes required forUSPS Revenue and cost interventions implemented by otherposts Typical revenue /volume enhancements Typical cost reductionsteps Typical revenue / volume enhancements Typical cost reductionsteps Conventional cost and revenue enhancements are minimal requirements Pricingenhancements Efficiency improvementsto processes and routes • Sales andmarketing • Key accountmanagement • Improved productbundling Further automation: sequencing, printing,etc • Productdevelopment • B2C parcel proposition • Value chain extensions (print,DM) • Intelligent Mail, Hybridmail Networkconsolidation • Generic cost reductions • Indirect, Purchasing, Capitalcosts Structural changes are required to close thegap • Diversification steps usedelsewhere • Financial/InsuranceServices • Logistics (B2B CEP, LTL, 3PL, reverse) • (e-) Government services • Information logistics (CRM, secure email) • Structural cost changes • Deliverymodel • Frequency: 5 or 3 perweek • Relaxing service standards/ days todelivery • Delivery points andtime • Integrate Post office network into retailers to lower costs & release cash fromassets • Lower labor costs to reflect market conditions (Non Career, Part-time, Outsourcing) Given the magnitude of the gap, structural cost changes areunavoidable Profit from diversification likely to be too limitedand too late tocompensate

23. Some posts are pursuing thesestructural changesnow Implementeddistributionchanges Changes underconsideration Implemented distributionchanges Changes underconsideration Canada: Reduction from 6 to 5 delivery days (1960s in urban areas, 1982 in ruralareas) • France: Considered moving from T+1 to T+2 delivery • According to La Poste, T+1 has ahigh • environmental impact and does not respond to strong demand, particularly bycompanies Australia: Reduction from 6 to 5 delivery days (1975); In rural areas delivery frequency can be between two and four times depending on cost and communityneed. Netherlands: Considered reducing number of delivery days from 6 to 52 and announced Dec 09 that its goal is to move to a 3 day deliverymodel3 Will close the last post office mid 2010 and fully integrate retail access intoretailers Belgium: Reduction from 6 to 5 deliverydays Greece: Reduction from 5 to 3.5 delivery days in rural areas Slovenia: Reduction from 6 to 5 delivery days in rural areas Continue to shift to more part timelabor • Germany: Deutsche Post proposed in December 2008 to reduce delivery days from 6 to5 • Proposal rejected by Germanauthorities Spain: Reduced scope of delivery, no delivery in remote homes more than 250m from the mainroads Denmark: Reduced frequency of delivery of non time critical class mail on alternatedays1 Somehouseholdswillgetnontime-criticalmailonMondays,WednesdaysandFridayswhileotherswillgettheirnontime-criticalmailonTuesdays,ThursdaysandSaturdays; As part of its Masterplan II announced in 2006; 3. Statement from TNT CEO Peter Bakker during Vision 2015 announcement on December 3, 2009 Source: Report "The Evolution of the European Postal Market since 1997", company reports; presssearch;

24. The pathforward • In the immediate term, there may be some revenue opportunities that offset some of the losses projectedhere • However, long-term viability requires a mix of structural changes to address highfixedcosts; these may include changesto • Delivery model, e.g., frequency,standards • Branch network • Labor model • Other posts are taking similar actions in response to decliningvolumes • These actions are profound changes to the business model – restoring viability through these steps will require both internal alignment and external buy-in

25. Appendix: Selected backup materials for key segments – Senderview

26. Bills /Invoices 44% TransactionMail Bill and invoice volume expected to fall44% Mail Rebound from recession offset by continueddiversion Impact of drivers (Senderview) Volume(B) 25 22.0 1.2 2.2 1.1 20 3.9 3.9 15 1.6 10 12.5 5 0 2009 2020 Mail rebound Organic growth Autopay / change in billingcycle Online present- ment (biller) Online present- ment (consol- idator) Mobile/ ATM present- ment Source: BCG analysis, customer interviews, USPS RPW Report, USPS Household Diary Survey, USPS volume trackingdata

27. 24% B2CCorrespondence TransactionMail B2C Correspondence expected to fall24% Impact of drivers (Senderview) Volume(B) 20 0.2 14.4 15 1.7 2.7 0.7 1.9 10 11.0 5 0 2009 Online channel Mobile/ email channel 2020 Industry growth / mailings per customer Mail rebound Organic growth Source: BCG analysis, customer interviews, USPS RPW Report, USPS Household Diary Survey, USPS volume trackingdata

28. 47% Bankstatements TransactionMail Bank Statement volume expected to fall47% Impact of drivers (Senderview) Volume(B) 12 8.5 0.3 0.8 0.4 8 2.9 0.5 4.5 0.6 4 0 2009 2020 Mail rebound Organic growth Account consol- idation Online present- ment (institution) Online present- ment (3rdparty consol- idator) Mobile/ ATM present- ment Source: BCG analysis, customer interviews, USPS RPW Report, USPS Household Diary Survey, USPS volume trackingdata

29. C2BPayments B2BPayments 57% 46% TransactionMail B2B/C2B Payment volume expected to fall52% Impact of drivers (Sender view) Volume of B2B and C2B payments(B) 1.30.8 15 14.20.7 2.6 1.2 1.4 3.9 5.8 1.7 10 2.1 0.7 6.8 3.1 B2Bpayments 5 8.5 3.6 C2Bpayments 0 2009 Mail rebound Organic growth Autopay / changein reporting cycle Online payment (direct) Online payment (consol- idator) Mobile/ ATM payment 2020 Source: BCG analysis, customer interviews, USPS RPW Report, USPS Household Diary Survey, USPS volume trackingdata

30. 30% First-Class Mail adletters AdvertisingMail First-Class Mail ad letter volume to fall30% Mail rebound offset by migration to StandardMail Impact of drivers (Senderview) Volume(B) 15 0.7 1.2 3.2 1.4 11.4 10 3.2 8.0 0.4 5 0 ImprovedShifttoOnline targetingStandard1 Email 2020 2009 Mail rebound Organic growth 1. Shift to Standard Mail indicates migration of advertisements from First-Class Mail to Standard Mail Source: BCG analysis, customer interviews, USPS RPW reports 2009, USPS Household Diary Survey2008

31. Standard Mail adletters 18% AdvertisingMail Standard Mail ad letter volume to increase18% Some volume capture from First-ClassMail Impact of drivers (Senderview) Volume(B) 60 2.0 3.2 10.3 8.4 38.0 40 1.5 1.1 5.3 32.1 20 0 2020 Shift from First Class Improved Online1 targeting 2009 Mail rebound Organic growth Content address- ableTV Email 1.Online channel includes paid search and bannerads Source: BCG analysis, customer interviews, USPS RPW reports 2009, USPS Household Diary Survey2008

32. Flyers 10% AdvertisingMail Flyer volume expected to increase about10% Some influx of volume captured from newspaperads Impact of drivers (Senderview) Volume(B) 40 2.0 4.0 4.4 6.2 3.5 30 2.6 26.2 4.8 23.7 20 10 0 Online1 Private carrier delivery (PCD) 2009 Mail rebound Organic growth Gain from news- paper Mobile Email 2020 1. Online channel includes paid search, website search andbanners Mail Rebound marked low confidence due to uncertainty in recovery time and not uncertainty in magnitude of recovery Source: BCG analysis, customer interviews, USPS RPW reports 2009, USPS Household Diary Survey2008

33. 29% Catalogs AdvertisingMail Catalog volume expected to fall about29% Mail Rebound from recession offset by smartertargeting Impact of drivers (Senderview) Volume(B) 20 15 2.2 2.3 12.6 1.0 2.9 1.4 10 8.9 0.4 5 0 Mail rebound Organic growth Online Improved targeting Mobile 2009 Content address- ableTV 2020 1. Online channel includes paid search, website search andbanners Source: BCG analysis, customer interviews, USPS RPW reports 2009, USPS Household Diary Survey2008

34. Appendix: Selected backup materials for key segments – Consumerview

35. TransactionMail Consumers expect volume of mailed bills tofall Decline will be greater as online financial servicesimprove Consumers expect a 30% drop in billvolume But if these improvements are made in onlineservices Bill receipt could decline~45% But if theseimprovements are made in onlineservices Bill receiptcould decline~45% Consumers expecta 30% drop in billvolume Remaining of '09values (%) Remaining of '09values (%) Improvement Score1 Improvements insecurity 100 100 Provision of a long and free archive ofbills Speed of paymentdelivery 80 80 Email alerts about paymentdates 60 60 Ease of enrolling to receive onlinebills 100 100 Ease of registering billers to whom bills are paid 40 40 71 Ease of accessing onlinebills 55 20 20 Ability to view multiple bills at onesite 0 0 2009 20202009 2020 Senders indicate high likelihood improvements will occur in the next ten years, including improvements tosecurity 1. Harvey balls based on score. 27-32: ¼, 33-38: ½, 39-45: ¾, 46-52: 1. Score indicates the percent of respondents who indicated that that improvement would lead them to significantly shift towards online services instead of paperbills Source: Consumer internet-based research, 11/09, n=1736; BCG analysis; Sender research,11/09

36. TransactionMail Consumers expect volume of statements tofall Decline will be greater as online financial servicesimprove Consumers expect ~30% drop instatements But if these improvements are made in onlineservices Statement receipt could decline~40% But if theseimprovements are made in onlineservices Statement receiptcould decline~40% Consumers expect~30% drop instatements Remaining of '09values (%) Remaining of '09values (%) Improvement Score1 Improvements insecurity 100 100 Provision of a long and free archive of statements 80 80 Ease of enrolling to receive online statements 60 60 Ease of accessing onlinestatements 100 100 Small fee instituted to receive paper statements 40 40 73 Features to make statement analysis easier 60 20 20 Ability to view multiple statements at one site 0 0 2020 2009 20202009 Senders indicate high likelihood improvements will occur in the next ten years, including improvements tosecurity 1. Harvey balls based on score. 27-32: ¼, 33-38: ½, 39-45: ¾, 46-52: 1. Score indicates the percent of respondents who indicated that that improvement would lead them to significantly shift towards online services instead of paperstatements Source: Consumer internet-based research, 11/09, n=1736; BCG analysis; Sender research,11/09

37. TransactionMail Consumers expect to mail fewerpayments Decline will be greater as online financial servicesimprove Consumersexpect ~25% drop inpayments But if these improvements are made in onlineservices Paymentscould decline~40% But if theseimprovements are made in onlineservices Paymentscould decline~40% Consumersexpect ~25% drop inpayments Remaining of '09values (%) Remaining of '09values (%) Improvement Score1 Improvements insecurity 100 100 Provision of a long and free archive of payment records 80 80 Enrolling for online billpay Accessing online billpay 60 60 Ease of registering billers to whom bills are paid 100 100 40 40 73 Ability to pay multiple bills via onesite 58 20 20 0 0 2009 2020 2009 2020 Senders indicate high likelihood improvements will occur in the next ten years, including improvements tosecurity 1. Harvey balls based on score. 27-32: ¼, 33-38: ½, 39-45: ¾, 46-52: 1. Score indicates the percent of respondents who indicated that that improvement would lead them to significantly shift towards online services instead of paperpayments Source: Consumer internet-based research, 11/09, n=1736; BCG analysis; Sender research,11/09

38. AdvertisingMail Consumers expect volume of ad letters tofall Decline will be greater as online advertisingimproves Consumers expecta ~20% drop in adletters But if these improvements are made in online advertising Improvement Score1 Perception that online ads are secure genuine Ad letters could decline~40% But if theseimprovements are made in onlineadvertising Ad letterscould decline~40% Consumers expecta ~20% drop in adletters Remaining of '09values (%) Remaining of '09values (%) 100 100 Perception that online ads do not collect information aboutconsumers 80 80 Provision of promotionaldiscounts Relevance of onlineads 60 60 Informative value of onlineads 100 100 81 Ease of use of onlineads 40 40 Ability to inform consumers of new products 60 20 20 Attention value of onlineads Ability of online ads to provide solicitations from charities consumers have workedwith 0 0 2009 20202009 2020 Senders indicate many of these improvements will be made in the next 10years 1.Harveyballsbasedonscore.7-20:¼,21-34:½,35-49:¾,50-63:1.Scoreindicatesthepercentofrespondentswhoindicatedthatthatimprovementwouldleadthemtomorestrongly favor Source: Consumer internet-based research, 11/09, n=1328; BCG analysis; Sender research,11/09

39. AdvertisingMail Consumers expect volume of flyers tofall Decline will be greater as online advertisingimproves Consumers expecta ~15% drop inflyers But if these improvements are made in online advertising Improvement Score1 Provision of promotional discounts from onlineads Flyers could decline~40% But if theseimprovements are made in onlineadvertising Flyerscould decline~40% Consumers expecta ~15% drop inflyers Remaining of '09values (%) Remaining of '09values (%) 100 100 Informative value about localstores 80 80 Perception that online ads do not collect information aboutconsumers Relevance of onlineads 60 60 Online ads' ability to allow consumers to compare products 100 100 86 40 40 Informative value of online ads 64 Online ads' ability to inform consumers of newproducts 20 20 Attention value of onlineads 0 0 How fun online ads are toread 2009 20202009 2020 Senders indicate many of these improvements will be made in the next 10years 1. Harvey balls based on score. 7-20: ¼, 21-34: ½, 35-49: ¾, 50-63: 1. Score indicates the percent of respondents who indicated that that improvement would lead them to significantly shift towards online ads instead offlyers Source: Consumer internet-based research, 11/09, n=1328; BCG analysis; Sender research,11/2009 38

40. AdvertisingMail Consumers expect volume of catalogs tofall Decline will be greater as online advertisingimproves Consumers expecta ~20% drop incatalogs But if these improvements are made in online advertising Improvement Score1 Perception that online ads do not collect information aboutconsumers Catalogs could decline~40% But if theseimprovements are made in onlineadvertising Catalogscould decline~40% Consumers expecta ~20% drop incatalogs Remaining of '09values (%) Remaining of '09values (%) 100 100 Provision of promotional discounts from onlineads 80 80 Relevance of online ads Online ads' ability to allow consumers to compare products 60 60 100 100 Informative value of onlineads 83 40 40 Attention value of onlineads 61 How fun online ads are toread 20 20 Online ads' ability to inform consumers of newproducts 0 0 2009 20202009 2020 Senders indicate many of these improvements will be made in the next 10years 1. Harvey balls based on score. 7-20: ¼, 21-34: ½, 35-49: ¾, 50-63: 1. Score indicates the percent of respondents who indicated that that improvement would lead them to significantly shift towards online ads instead ofcatalogs Source: Consumer internet-based research, 11/09, n=1328; BCG analysis; Sender research,11/09 39

41. Internetsurvey Years of experience online drives Consumer receptivity for conducting transactionsonline Respondents who prefer to pay online(%) 100 Billreceived in themail Billreceived online 80 60 85 84 40 81 74 71 66 63 62 56 54 51 42 20 33 29 0 11 to 15 15-20 20+ Years of internetexperience <2 2 to5 5 to8 8 to11 Source: BCG analysis; Consumer internet-based research, 11/09, n=1736 40