ACMA Educates the USPS on Catalogs

Jul 01, 2010 9:30 PM  By

You Wouldn’t Know It by the Punishing Rate Hikes for Standard Mail Flats in Recent Years, But the U.S. Postal Service wants you to mail more catalogs. You’d probably like to be able to afford to mail more catalogs as well.

The problem has been that the Washington decision makers who control mailers’ fates don’t understand how catalog mailing operations function. As a result, the postage increases catalogers have endured over the years — most notably, the 2007 rate hike — have served neither mailers nor the USPS.

The catalog industry needs to help educate key executives from both the USPS and the Postal Regulatory Commission. We must provide them with real data so they have the information they need to make better decisions about catalog postal rates.

That’s why we at the American Catalog Mailers Association are launching an initiative that will survey, collect and present this crucial catalog data to the folks who are determining your postal rates.

Misperceptions abound

Why do we need this survey? There are widespread misperceptions about catalogs in Washington. Some of these are dead wrong, and they are driving faulty decisions at the USPS and its regulator. A common belief, for instance, is that catalogers use only Standard Mail flats. Catalogers actually use a variety of mail products.

Some mail is more profitable than others, and Standard Mail flats are considered by postal accounting to be an unprofitable mail category. This may not be accurate, but it is widely believed.

Another misperception is cataloger elasticity of demand, or how a change in price affects volume or demand. There is no catalog-specific elasticity number that we’ve been able to find.

Decision makers are using an old average for all Standard Mail of -0.87. In other words, USPS and PRC officials believe that if they raise catalog postage by 5%, catalog mail volume will fall by a smaller amount, or 4.4%.

But the ACMA‘s research indicates that, in this instance, catalog mail volume would fall by about 6.5%. That would mean the USPS ends up losing more revenue than it gains from a rate increase. There’s a big difference between these two elasticity numbers — and the postal-rate-making decisions they would result in.

You can see why erroneous elasticity numbers lead to large catalog rate increases. If you believe -0.87, you would conclude that mail volume won’t decrease enough to offset the positive impact of higher postage prices. This simply is not true.

What’s more, the Postal Service needs to consider that catalog companies generate not only Standard Mail flats, but also carrier route, Standard Mail letters and postcards, First Class mail, and packages.

Some postal personnel do not understand the “echo effect” (or multiplier effect), in which one catalog can generate dozens more mailed catalogs, plus a variety of other mail pieces from order confirmation postcards to packages.

How do we get the message across? ACMA has developed an extensive survey to address each of these issues. We are collecting detailed catalog mailing information and will convert it into meaningful economic data to help document for decision makers how the catalog business truly works. (For details, see “ACMA catalog postal survey specifics,” right.)

Since the survey asks for information some may consider proprietary, ACMA will keep all responses confidential. A limited number of people will have access to the raw data, and those who do will sign a strict nondisclosure and confidentiality agreement.

A special Website implemented by the list firm infoGroup will automatically aggregate the data and keep it secure. And only aggregate results will be released — no specific responses will be distributed.

All participants will receive an aggregate copy of the results. Extracts from the survey will also be published in an upcoming issue of Multichannel Merchant.

This is an opportunity to bring about real change in catalog postal policy, so please help us by completing the survey, which is scheduled to be e-mailed starting in July. We need a high degree of participation for results that are credible and compelling if we want the USPS and the PRC to take this seriously.

Hamilton Davison (hdavison@catalogmailers.org) is executive director of the ACMA.

ACMA catalog postal survey specifics

The American Catalog Mailers Association is now surveying catalogers to collect specific data on catalog mailing practices. It will use the information to educate Washington decision makers and bring about change as to how catalog postal rates are set. The survey was scheduled to be deployed via e-mail starting in July. Here’s what the ACMA will need:

  • total annual catalog circulation and how it breaks down in the various postal products of carrier route or high-density Standard Mail flats, carrier route or high density Standard Mail letter, etc.
  • average weight of catalogs mailed
  • percentage of catalogs that drive direct Internet, phone or mail orders
  • percentage of catalogs that drive retail store traffic and sales
  • annual catalog frequency
  • annual circulation of noncatalog mail
  • variable cost break-even of catalogs that supports direct sales
  • number of mailings to 12-month buyers
  • annual response rates
  • portion of packages shipped via the USPS, UPS, FedEx or other carriers
  • portion of catalog requests per year
  • total rental and exchange file turns on 12-month buyer files

For more information, contact ACMA’s deputy director Paul Miller at pmiller@catalogmailers.org