Cutting Back for the Rate Hike

Something’s gotta give. That’s the philosophy of catalogers as they prepare for the upcoming postal rate increase, which at press time was expected to take effect June 30. With rates rising an average of 7%-10% for catalogers, mailers are scrambling to figure out how to cut costs elsewhere to compensate.

One thing they won’t be doing is passing the increased costs on to their customers. Unlike parcel shipping rate hikes, which a number of catalogers typically pass on to their customers, mailers contacted said they would not make customers absorb higher catalog mailing costs.

Nor are most catalogers adjusting their schedules to get more books in the mail prior to June 30. “Unless it’s real convenient for your schedule, loading up mailings before a postage increase is just a knee-jerk reaction,” says Mel Concors, director of marketing for Spring Valley, CA-based Chinaberry Book Service. “You can wind up stopping the order curve you’ve got working. And those sales from an earlier mailing whose life is not yet complete are lost once you lay another catalog mailing on top of it.”

Chinaberry plans to mail its Chinaberry catalog, which sells children’s books, on June 7. A week later, the company will mail its Isabella catalog, which sells spiritual gifts and books. To move up its subsequent mailings from July 19 and July 26 would not only cannibalize the June mailings but would also leave the company “with a big gap of no mail between late June and Aug. 30, which is when we have our following mailing,” Concors says. And because the company mails in May as well, a shift of both the June and July mailings is also out of the question.

Likewise, Associated Bag. Co. says that to get an additional drop in the mail prior to June 30 “would almost be like saturation mailing,” says Scott Pietila, director of sales and marketing for the Milwaukee-based shipping supplies cataloger.

ATD-American, a Wyncote, PA-based cataloger of institutional supplies, has a simple rule of thumb regarding whether to change mailing dates to beat a postage hike. “If you have to go more than 30 days outside the proposed mailing schedule, you don’t change the date,” says executive vice president Arnold Zaslow, “because the alleged postage savings may be offset by lower response.”

Rather than changing its mailing schedule, ATD-American is considering whittling the trim size of its books by 3/16″ on one side and 1/8″ on another to reduce their weight. Zaslow estimates that the move could save the company $20,000-$25,000 per mailing.

Reducing paper weight isn’t an option, Zaslow adds: “Last year, we saved $20,000-$25,000 per mailing by dropping paper weight to 32 lb., which is as low as we want to go.” The company had made that decision to offset last year’s postage rate hike.

Madison, VA-based Plow & Hearth is in a similar situation. “Over the past several years, we’ve made trim size and paper weight reductions” to compensate for postage increases, says David Hay, director of database for the home and garden products cataloger. “At 32-lb. body paper weight and 50-lb. cover weight, our book is already pretty light relative to our competitors’.”

Rather than changing paper weights or trim sizes, Chinaberry is turning to technology to offset the postage hikes. The company plans to selectronically bind its 136-page core Chinaberry catalog and its 56-page Chinaberry prospecting catalog. Selectronic binding allows the cataloger to load the different covers of both books simultaneously. “Our merge/purge provider gives each book a separate code, which is fired on at the bindery, creating the proper version by list,” Concors explains. This enables Chinaberry to produce and mail both editions at the same time and reduces its printing and binding costs 8%-10%. Timing is an issue, since the two books happen to mail at the same time. Concors would otherwise avoid doing this if it forced Chinaberry to alter the drops of either book.

Mailing less

The most obvious way to compensate for the postage rate hike would be to mail less. Gardenings supplies cataloger/retailer Smith & Hawken, for one, is considering that tactic. “We have to be more conservative in our planning,” says Barry Gilbert, president/CEO of the Novato, CA-based company. “We won’t be as aggressive as we would have been if there weren’t a rate increase.”

Associated Bag’s Pietila notes that the rate increase “has caused me to revisit our circulation strategy and reduce our prospecting somewhat.” Associated Bag is also turning to advertising alternatives, such as space ads in the Thomas Registry compilation of manufacturers and the Yellow Pages. “We’re looking for a better return on investment through those channels,” Pietila says.

Rather than reducing circulation to offset the postage hike, religious-gifts mailer Abbey Press is trying to increase response to and revenue from the books it will mail this year. The St. Meinrad, IN-based cataloger will use more marketing incentives, says president/CEO Gerald Wilhite, such as deferred billing, discounts, and gifts-with-purchase.

One tactic Abbey Press won’t use is free shipping and handling. “We tried that before,” Wilhite says, “and the gains weren’t worth the costs. Plus, it was very hard to eliminate the incentive once we started it.”

For industry news as it happens, visit the Catalog Age Website at www.CatalogAgemag.com.

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