The U.S. Postal Service’s 2.1% average rate increase, announced Tuesday, won’t stop merchants from mailing catalogs next year. But some mailers say they will look at other options to increase their non-mail channels.
Mailers will see an average 2.1% increase in postal rates effective Jan. 22, 2012 according to the U.S. Postal Service. Prices for shipping services will also change on Jan. 22.
Carrier Route flats will increase 2.4% and High Density flats 2.8%.
Deb Dyer, vice president of marketing for bedding merchant Cuddledown, says the rate increase “won’t keep us from sending catalogs to our house file or prospects, but it will make us look at other digital prospect opportunities and programs.”
Ultimately, Dyer adds: “We’re looking to create a diversified portfolio with our prospecting efforts so we don’t need to mail as many catalogs and incur the costs.”
Larry Davis, vice president of marketing for Ross-Simons, says his company is looking at a 2.5% increase on postage across its blended mailing and shipping portfolio, which is a direct hit to its bottom line of a couple hundred thousand dollars.
“We simply cannot pass postage increases on to the consumers when they have so many alternate ways to shop,” Davis says. “While we appreciate that the Postal Service struggles financially, given declining circulation, we strongly believe that postal rate increases should come with additional value for the mailer.”
Davis says if the USPS had allowed for a 10% weight increase per piece in exchange for the rate increase, Ross-Simons could mail more pages, offer more products and expected more direct response.
“We might even have mailed more catalogs and shipped more packages,” Davis adds. “As things stand, we will look to reduce circulation to offset the increase in postage rates.”
Jonathan Fleischmann, president/CEO of Potpourri Group, says his company takes a disciplined analytical approach in reviewing postal rate increases.
“We are constantly updating our variable cost inputs (by brand) and therefore any known cost increases raise our breakeven points, impact our short-term value of a customer and therefore reduces our cut-off points for both our print and ecommerce expenditures,” Fleischmann says. “We continue to be concerned about the USPS’ cost structure and viability.”
Hamilton Davison, executive director of the American Catalog Mailers Association, says the overall increases were moderate, reflecting an accurate assessment that additional rate increases are counterproductive, despite some calling on the agency to raise rates well above inflation.
“The ACMA had been forecasting to members for months to expect a 2.4% increase,” Davison says. “The weighted average for catalogs comes very close to this.”
Davison says his group was surprised that Standard Mail flats received an increase on the low end of the spectrum while High Density flats received an increase at the high end.
“This is the reverse of what we would have forecast,” Davison says.
Jerry Cerasale, senior director of government affairs for the Direct Marketing Association, says it appears the USPS is continuing its pricing in Standard Mail to discourage carrier route mail.
“On first glance, the USPS wants to encourage Standard Mail to go through flat sequencing sorters rather than bypass that operation by presorting to carrier route,” Cerasale says.