Mailers Question and Resent Rate Proposal

Posted on by Chief Marketer Staff

Mailers are resentful that the U.S. Postal Service could request a rate hike in light of all the surpluses it’s registered over the past few years. But some indicated they would not (or could not) immediately move their marketing away from direct mail.

“There won’t be any significant changes in the way we mail but we will try to mail earlier to beat [the implementation date], ” said Arnie Zaslow, executive vice president at business-to-business cataloger ATD American, based in Jenkintown, PA. “And we’ll try to mail in the most efficient manner to take advantage of all the postal discounts. ATD mails out several million catalogs per year.

“Why does the USPS need an increase in light of all the surpluses it has had and the fact that inflation is so low now?” he asked.

On Tuesday, the USPS was authorized by its Board of Governors to seek an average rate increase of nearly 8% starting early next year, pending Postal Rate Commission and BOG approval.

“It’s kind of deceptive the way they said it’s only an 8% increase because when you look at three and five-digit ZIP code mail with barcodes, the increase is more like 14%,” said Mark Heinz, manager of postal affairs at cataloger Foster & Gallagher, Peoria, IL. “And most catalogs fall under this category.”

He noted that the company, which mails out about 300 million catalogs per year, might look further into reworking its mailing strategies to see if it can get additional postal work-sharing-type discounts, but admits the firm has already taken advantage of all such discounts the postal service has to offer. “They just raised the prices on us,” he quipped.

He also said Foster & Gallagher–many of whose customers live in rural areas–would not be able to move away from catalog marketing any time soon, even though each of its catalogs has a Web site.

Similarly, the Disabled Americans Veterans, a high-frequency, high-volume nonprofit mailer, would have a hard time getting away from mail. “In the next 12 months we’re going to see if the Web is a viable marketing medium for us, but overall we’re stuck with mail,” said fundraising director Max Hart, who similarly questioned why the USPS needs a postage increase now.

Hart indicated he could live with the proposed one cent increase in first class rates, but found worrisome the other proposals that could raise its rates by as much as $600,000 per year–especially in light of the huge increases nonprofit mailers had to shoulder in the last rate hike.

“The nonprofits got hit pretty bad during the last rate case, but Postal Rate Commission chairman Ed Gleaming said his hands were tied,” said Hart. “We hoped the USPS would take that into account but they didn’t.”

At Consumer Reports, the nonprofit magazine, senior circulation director Simon Aronin, said he expects to be hit with an increase of between 5.5% and 6% which could prompt it consider mailing less, to raise its subscription rates and to terminate its relationship with marginally profitable subscribers.

He said that the pending postal hike makes alternative forms of delivery, such as card decks, newspaper inserts and the Internet look all the more viable, noting that the magazine is actively developing techniques to advance the collection of e-mail addresses.

Longtime USPS observer Lee Epstein, chairman of Mailmen Inc., a Hauppauge, NY, lettershop, also blasted the size of the postal service’s request and its timing–and questioned whether the USPS still knows its role.

“The postal service hasn’t figured out where it stands with all the new technology and that’s the problem,” says Epstein. “Is it just going to be a package delivery service? We’ve got FedEx for that.”

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